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Good Morning. The goods and services tax (GST) cuts delivered bumper auto sales and record credit card swipes in 2025. But as we head into 2026, early numbers show that this bump in consumption may not last. What happens when the discounts stop doing the heavy lifting and consumption has to stand on incomes, jobs and consumer confidence?

India’s equity benchmarks fell for a second session on Tuesday, with the BSE Sensex closing at 84,679.86, 533.50 points or 0.63% lower. The NSE Nifty50 closed at 25,860.10, falling 167.20 points or 0.64%.

In other news, Vedanta gets go ahead to split the oil-to-metals conglomerate into five separately listed entities. Meanwhile, on this week’s Build On Blockchain, why it matters that the US market regulator has allowed trading on blockchain platforms.

GST Cuts Delivered a Festive Pop That Won’t Sustain In 2026

What

The GST Bachat Utsav, as it was termed by the government, prompted a burst of spending across categories from September and October 2025. Rate cuts across automobiles, appliances, fashion, insurance and budget hotels made goods more affordable at a time when consumers were already preparing for festive buying.

On the day after the GST rates became effective on September 22, 2025, Indians swiped their credit cards over 10 million times, generating Rs 6,400 crore in one day of spending. By Diwali, considered auspicious for new buys, the momentum picked up further with 12.3 million credit card swipes worth Rs 7,328 crore, according to SBI Ecowrap. 

Between the festival months of September and October, credit card spending rose 5%, amplified by the GST rate cuts. 

“This festive season, our total spends in Q2 FY26 touched an all-time peak of ₹107,063 crore, a strong 31% YoY growth,” said Salila Pande, MD & CEO, SBI Card adding that online spends accounted for 62.5% of the total retail spends.

Consumer durables, restaurants, and department stores were among the strong contributors. 

But the surge already appears to be fading. Early data, sector-level trends, macro indicators and price behaviour all indicate that the GST-led consumption bump was sharp, but it’s going to be short-lived, unlikely to meaningfully spill over into 2026. 

Why?

Weak November numbers, muted price transmission, uneven spending patterns, fragile macroeconomic conditions, and the historical fact that tax-driven consumption spurts normalise quickly all point to the same conclusion that the GST cuts provided a temporary stimulus, not a sustained consumption revival.

The cooling aligns with patterns seen historically. “Tax-driven consumption spurts tend to normalise within two to three quarters as the initial stimulus fades out and demand aligns with underlying income and credit conditions,” said Sankar Chakraborti, MD & CEO, Acuité Ratings and Research. 

Not just experts, rating agencies too have said that this momentum will slow. 

India Ratings has revised its private final consumption expenditure (PFCE) projections to 7.4% for FY26 compared to 7.2% in FY25, on account of GST cuts and lower inflation. It added that the pick in sales for consumer durables and auto were “unlikely to continue in the rest of the fiscal year”.

ICRA noted that even if the consumer zeal holds on, there could be a variance between items. “While the GST rationalisation may support demand for regular use/small-ticket items after the festive season, the sustenance of the buoyancy in demand for big-ticket items remains to be seen.” 

Credit card companies and lenders are, however, confident that the sales momentum seen during the festive season will continue. 

Would they? 

Coal India Falters

Government auditor Comptroller and Auditor General (CAG) has flagged sharp delays in Coal India Ltd’s solar push, noting the state-run miner had installed only 122.49 MW of solar capacity, just 4.08% of its 3,000 MW target, by December 2024.

Context: The target, set by the Centre in 2017 to help Coal India transition into a net-zero energy company by 2024, has now been pushed back by several years, with CAG urging faster execution.

Overview: In its report, CAG said work orders had been issued for just 692.5 MW of ground-mounted projects, and 34.56 MW of rooftop capacity, with commissioning timelines extended to 2027–28. Coal India has formed joint ventures with NTPC Ltd and NLC India Ltd, and set up a special purpose vehicle, CIL Navikarniya Urja Ltd, to accelerate solar development.

Vedanta Rewrites Playbook

The National Company Law Tribunal (NCLT) has approved Vedanta’s plan to split the oil-to-metals conglomerate into five separately listed entities, clearing a major hurdle for a restructuring first announced in 2023.

Fast Facts: The proposal had earlier faced resistance from the government, which was concerned that a breakup could affect the recovery of outstanding dues. The approval follows clearance from Vedanta’s shareholders and lenders in February.

What’s Next? The company said the ruling would speed up the demerger process, which it aims to complete by March 31, 2026. After the split, Vedanta Limited will retain the base metals business, while Vedanta Aluminium, Talwandi Sabo Power, Vedanta Steel and Iron, and Malco Energy will be listed independently.

Exports Hold the Line

Despite US tariffs, Indian exports to the United States grew more than 22% year-on-year, according to official government data.

The Backstory: A weaker rupee improved export competitiveness, while strong local demand supported manufacturing output.

What This Means Going Forward: The export resilience comes as Washington presses India to lower tariffs and ease non tariff barriers on American farm products under a proposed trade framework. But experts say India can now negotiate from a place of strength. “India now has the leverage to press for tariff relief after export gains despite no tariff cuts,” said Ajay Srivastava to Reuters, founder of the Global Trade Research Initiative or GTRI.

NPS Gets Flexible

The Pension Fund Regulatory and Development Authority (PFRDA) on Tuesday eased norms of the National Pension System (NPS). Among the most significant changes is that if the corpus is more than Rs 12 lakh, the subscriber can now withdraw lumpsum of 80% and only 20% will need to be annuitised.

The Context: Earlier, subscribers needed to buy an annuity with 40% of their corpus, and they could withdraw 60% as lumpsum. However, for government employees, it remains 40%. The new amendment has also removed the mandatory lock-in period of five years for non-government subscribers.

Why It Matters: These new amendments will provide greater flexibility to the subscribers of the NPS in terms of how much they want to withdraw their corpus and how soon.

✍️ Zinal Dedhia, Kudrat Wadhwa, Shubhangi Bhatia | ✂️ Rohini Chatterji | 🎧 Joshua Thomas

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