The decision of the Central government to reduce GST rates, first announced on August 15 from the ramparts of the Red Fort, has seen the light of day. From September 22, only two rates will prevail, and many items of regular consumption will be cheaper. But can additional buying be taken as guaranteed? Already it has caused some harm for businesses like automotive dealerships, and for items that are non-priority, consumers will take their time. In addition, to afford these items, people need jobs, which are scarce.
This decision will certainly benefit the middle classes but not the lower income groups who are struggling to pay off EMIs and survive. Food is not cheap in India and one only has to visit a regular eatery to see how expensive things are.
It also remains to be seen if this expected consumer boom will offset the impact of tariffs. In a globally volatile world, we do not know what the next steps will be by our trade partners, etc. The government’s decision also indicates that we, in our hallowed traditions, respond best to external stimuli or actions.
In 1991, India’s liberalisation was because we had little or no money for oil imports. The economy opened up, and the rest is history. With the GST restructuring, the stocks will go up, SIPs will look better, even as some try to brush up their résumés for jobs.
