This study examines the economic impact of 2025 GST rate reductions on agro-processing in Maharashtra, India, specifically assessing effects on production costs, farmer incomes, and state revenues among small sugarcane and horticulture producers. Amid Maharashtra's projected 7.9% GSDP growth for 2025-26, contrasted by agriculture's 3.4% expansion, the reforms lowered GST on refined sugar, processed fruits/vegetables, and fish products from 12% to 5%, targeting cost savings of 6-7% for 50 lakh smallholders with holdings under 2 hectares (Economic Survey of Maharashtra 2025-26; PIB India "GST Reforms 2025"). Utilizing secondary data from economic surveys, government releases, and sectoral reports, the analysis compares pre- and post-reform indicators, including input-output ratios, GST collections, and income metrics. Results indicate limited benefits for marginal farmers: burdensome compliance requirements (e.g., invoicing, e-way bills) and ineligibility for Input Tax Credit on high-GST inputs like pesticides (18%) and diesel negated output-side relief (ClearTax "Impact of GST"; Cashflo). Additional constraints of 6-15% post-harvest losses, water scarcity, and supply chain disparities further constrained gains, while initial state revenue shortfalls of 2-3% raised fiscal concerns (The Week "GST 2.0's quiet bias"). Findings reveal structural barriers undermining reform efficacy, perpetuating Agri-sector imbalances. Policy recommendations include targeted exemptions, digital compliance tools, and ITC access for smallholders to promote equitable growth.
Dhanvin Premal Shroff (Wed,) studied this question.