In his monthly address, PM Modi once again stated that GST was not an economic reform, but a social movement. He also hoped that this “successful” experiment has helped the economy.
Can just one month be a metric for its success? A week long journey from Delhi to Purvanchal and the Nepal border helped understand the answer. From train coaches to tea shops, GST was the topic of choice for discussion.
Ambiguities That Came to Light
- Despite vexing data and several long reports, the common man is still clueless about the benefits of GST.
- Businessmen are still trying to make sense of GST’s pattern. Some businesses that sustain on borrowings have been hit because of this.
- Every trader wants his junior to clear pre-GST accounts. This has currently slowed the pace of business.
The Government, Business and Public Aspects of GST
Government
More Than 12 lakh Registrations
Over 12 lakh businessmen across the country applied for new registration under the GST system, as Revenue Secretary Hasmukh Adhia stated. He said that nearly 10 lakh applications have been approved for registration, while the remaining applications are still pending. Businesses were given time till 30 July to register.
Whenever a business applies for registration under GST, it is given a temporary GISTN. As a second step, the businessman fills his full details on the GST network and is then he given a permanent registration number.
Traders Given More Time to Adopt Composition Schemes
The deadline for adopting the composition scheme under GST has been extended to 16 August. Earlier, it was 21 July. The government has said that so far 5 lakh companies have chosen composition scheme under GST.
What is the Composition Scheme?
This scheme has been prepared as an option for taxing small businesses whose turnover is up to Rs 75 lakhs (up to Rs 50 lakhs for eight North Eastern states and hill states like Himachal Pradesh). Under this scheme, traders, manufacturers and restaurateurs can pay taxes at rates of 1, 2 and 5 percent.
Private TV Channels to Spread Awareness: Government
The Center has asked private TV channels to spread awareness about GST by running a 'scroll' on their screens. In a letter to all private TV channels, Amit Katoch, the Director (Broadcasting), Ministry of Information & Broadcasting, said,
The GST awareness campaign ‘Manthan’ is being organised across the country. To promote this, you are requested that the scrolls be run on this issue on all channels.
Businesses
Sensex Soaring
Investors concerned about the GST were tensed from the beginning. Various speculations were being made about the impact on the market. But after GST kicked in, the first week of business till last week has seen rapid growth.
- Nifty50 crossed the 10,000-point mark for the first time on 25 July
- Sensex also set a new record on 25 July, touching the record-breaking upper level of 32,374
- National Stock Exchange Nifty crossed 9,800 points for the first time on 12 July
- For the first time on 13 July, Sensex of the Bombay Stock Exchange crossed the 32,000-point mark
- During this period, banking, automobile and FMCG sectors contributed significantly to market growth
Hard Times for Hospitality Industry
The hospitality industry seems unhappy during the first month of GST. They have said that the meeting, exhibition and conference part of the business has been hit. Earlier, business was also affected due to the highway liquor ban.
A top official of the Hotel and Restaurant Association of India (HRWI) said that venues that were booked before GST have been canceled at large and under the new tax regime. Moreover, activities run by hotels outside the home state no longer carry the advantage of input tax.
Mobile Market Not Affected
In the year 2017, the total demand for smartphones stood at 23.4 million devices, which is growing at a rate of 11 percent per year. GST has not had an impact on this sector. Global Market Research GFK found out, "The demand for smartphones in India has remained steady and it was also seen a rise in the second quarter of 2017."
Auto, FMCG See Reduction in Prices
With the introduction of GST, these companies have announced a reduction in prices.
Four wheeler companies
- Maruti Suzuki, Toyota Kirloskar, JLR and BMW have seen price drops ranging from Rs 2,300 to Rs 2 lakh across models
- Nissan, Skoda, Isuju have also lowered the prices
- Tata has cut the commercial vehicle category by up to 8.2 percent
Two-wheelers companies
Companies like Hero Moto Corp, TVS, Bajaj Auto, who make two wheelers, have cut prices from Rs 350 to Rs 8600.
Soap, Shampoo, Hair Oil Become Cheaper
Hindustan Unilever (HUL), Godrej Brand, Wipro Consumer Care soap manufacturers have also cut prices of their products.
Public
Shortage of Generic Medicines
Some media reports published over the last month have stated that the lack of generic drugs is still a problem. CNBC has said that even medicines for common cold are not available.
However, according to a government company providing medicines for these centers, the deficiency of drugs will be gone by 15 August.
Notice to the Central Government on Sanitary Napkins
In response to a petition seeking the withdrawal of GST from sanitary napkins, the Bombay High Court sent a notice to the Central Government and the Maharashtra government on 20 July. An NGO had approached the court demanding removal of GST from sanitary napkin.
On 21 July, the government said there was no proposal to remove GST levied on sanitary napkins.
What Do Surveys Say?
Moody's
India's GDP growth rate will be within the range of 6.5 to 7.5 percent during next 12 to 18 months and GST will help in increasing the pace of economic growth.
Morgan Stanley
Global brokerage firm Morgan Stanley has reduced its inflation projections for India for 2017 to 3.1 percent, which was first at 3.6 percent. The key reason behind this is the implementation of GST and the monsoon is expected to be better.
Nomura
According to Japanese financial services firm Nomura, the GDP growth rate of India in the June quarter was estimated to be 6.6 percent. The firm has said in a study that some negative impact on the growth rate has come about after GST.
(This article was first published on Quint Hindi)
(We all love to express ourselves, but how often do we do it in our mother tongue?Here's your chance! This Independence Day, khul ke bol with BOL – Love your Bhasha. Sing, write, perform, spew poetry – whatever you like – in your mother tongue. Send us your BOL at bol@thequint.com or WhatsApp it to 9910181818.)
(At The Quint, we are answerable only to our audience. Play an active role in shaping our journalism by becoming a member. Because the truth is worth it.)