India’s greatest strength is its people. With nearly two-thirds of the population under the age of 35 years, the country’s economic engine is powered by aspiration, enterprise and consumption. This demographic dividend is not merely a statistic. It is the pulse of an economy that is increasingly youthful, ambitious and globally connected. GST 2.0 is a reform that directly responds to this advantage. By simplifying rates, reducing burdens on essentials and exempting services such as insurance, the new structure of GST 2.0 strengthens household purchasing power and supports the ambitions of young India.
India’s household spending
Private consumption already accounts for over 60% of India’s GDP, a proportion far higher than in many other large economies. This makes household spending the single-most powerful driver of national growth. When families save on taxes, even by a small margin, their disposable income increases. Multiplied across millions of households, these savings translate into significant demand for goods and services —from basic necessities to education, health care, housing and digital products. GST 2.0 unleashes this multiplier effect, ensuring that affordability at the micro-level translates into growth at the macro-level.
For young households balancing equated monthly instalments (EMI), health-care expenses and education costs, the reform provides genuine relief. Reduced taxes on essentials ease monthly financial pressure, while exemptions on critical services such as insurance encourage a culture of protection and planning. For many families in urban and semi-urban areas, the reform could be the difference between postponing an aspiration and achieving it sooner. By making everyday life slightly more affordable, GST 2.0 makes long-term goals such as home ownership, education or health security more attainable.
The exemption of GST on health and life insurance premiums is particularly meaningful. India’s insurance penetration has historically been low, and cost has been a major barrier. For a young workforce juggling EMIs, student loans and discretionary spending, insurance often felt like an avoidable burden. Removing the tax burden changes that equation. It sends a clear message that financial protection is not just an individual choice but a national priority. Over time, this measure will accelerate insurance penetration, strengthen household resilience and reduce the vulnerability of families to sudden medical or financial shocks. In the process, it creates a healthier, more secure society — one where risk is shared, not borne by individuals alone.
The reform is equally significant for micro, small, and medium enterprises (MSMEs), which together employ over 110 million people and contribute substantially to India’s GDP. For decades, compliance complexities and uneven tax structures have discouraged many small firms from formalising. GST 2.0 simplifies these processes, reducing friction and encouraging wider participation in the formal economy. For young entrepreneurs, this translates into easier access to credit, greater visibility in supply chains and stronger confidence in building businesses that can scale. By easing the path for MSMEs, the reform empowers the very segment that provides jobs and opportunities to young India.
Youth-driven consumption creates a virtuous cycle. When affordability increases, demand rises. Rising demand encourages new investments. Investments generate employment. Employment fuels further consumption. This cycle, once strengthened, becomes self-sustaining. GST 2.0 nurtures this cycle by aligning fiscal policy with the realities of a youthful and ambitious nation. It recognises that consumption is not merely a private activity but the collective force that shapes the country’s growth trajectory.
Just as important as affordability is predictability. A tax system that is transparent, consistent, and stable provides confidence to young professionals planning their financial futures. Entrepreneurs too benefit from knowing that their compliance costs will not fluctuate unpredictably.
GST 2.0, with its two-tier structure, addresses this need for predictability. It reassures citizens that India’s economic journey will be supported by fair and transparent governance. That trust is as important as the immediate financial relief delivered by lower rates.
Few countries have enjoyed a demographic opportunity on the scale that India does today. But such advantages can also become risks if not properly harnessed. A young population without opportunities can quickly turn disillusioned. GST 2.0 is a step toward ensuring that India’s youth dividend is not squandered. By aligning fiscal reform with the aspirations of a young population, it creates the conditions for inclusive, consumption-led and sustainable growth.
A new foundation
As India moves towards becoming a mature, consumption-driven economy, GST 2.0 provides the fiscal architecture to channel youthful aspiration into national momentum. It is a reform that reduces financial barriers, encourages protection, supports entrepreneurs and builds trust. Most importantly, it is not only a reform for today’s households but also a foundation for the India that this generation will build. By empowering young India to spend, save, and secure its future, GST 2.0 strengthens the very core of the country’s economic promise.
Suneeta Reddy is Managing Director of Apollo Hospitals Enterprise Limited
Published – September 08, 2025 12:40 am IST