The automobile sector in Goa is going through its worst phase in close to two decades. The sales are declining at a rapid rate, some dealerships have already shut down and a number of people have lost their jobs as well.
This is not just another slowdown, it is a wholesale crisis. Leading manufacturers like Maruti Suzuki and Hyundai India have reported decline in their sales at pan-India level. By now, the crisis has affected Goa too.
This is the time when both the central government and the state government should support the auto sector. This is because the auto sector is one of the biggest constituents of the Indian and Goan economy.
Significant number of workforce is employed directly and indirectly by automobile companies. In Goa alone, auto sector employs 8,000 people and its contribution to the State’s exchequer stood at Rs 600 crore annually through taxes.
Now that the auto manufacturers and dealers are facing a decline in sales, the government must step in with some sort of a relief. It must also be appreciated that some of the government’s own policies have caused such disruption in the auto sector.
For example: All automobiles will have to be compliant with Bharat Stage VI norms from April 2020 as compared to Bharat Stage IV norms at the moment. Such emission norms will bring India at par with developed economies like Europe and the US.
Therefore, norms are in the right direction, per se. But, cost to comply with such norms will be higher. As a result, auto manufacturers are not pushing sales this year. Apart from it, larger economic slowdown in India has also affected auto sales really badly.
In Goa as well, people are delaying purchase decision when it comes to cars and bikes. Experts opine that they don’t see sales reviving anytime soon. What can the government do in such a case?
Auto dealers in Goa have demanded 50% reduction in road tax for three months of August, September and October. Given that the road tax is within the purview of the State Government, it may consider reducing it.
But, the government will also have to consider what impact tax reduction will have on its own revenues. If tax reduction gives a boost to sales, then the government will make more revenue on lower tax rates. However, if sales don’t increase after tax cut, there will be a drop in government’s tax revenue as well.
It is tough to say what the final decision of the government should be. But, for starters, the State Government must speak to auto dealers to understand their problems and also to know how many people can lose their jobs if the slowdown continues.
