The trade of goods continued to get affected in the month of August despite this month having a number of festive occasions like Raksha-Bandhan, Independence Day and Ganesh Chaturthi.
Several sources confirmed that the first 15 days of August saw a significant drop in business this year compared to the previous year and the dominant reason was hiccups caused by transition to Goods-and-Services-Tax (GST) regime.
Parag Joshi, managing partner, Jutex and Laminex, said, "For us, business was slow in the first fortnight of August, but it picked up later. There is a bit of apprehension in the market due to GST. For instance, if I buy inputs from a dealer, who doesn't pay GST, then I will not be able to get input tax credit." Joshi is in the business of packaging for fertilisers and chemicals.
While there is no doubt that GST is a reform oriented move from long term perspective, but in the short-run, it has affected trade of goods to an extent. As Joshi explained, GST works on the principle of input tax credit.
No matter at what stage of value-chain you are, you can get your tax liability reduced to the extent your suppliers have already paid tax. But, if you don't pay GST and don't issue a bill, your customer can't show proof of trade with you to get input tax credit.
It was this reason, which had disrupted the supply of a number of products in July and August. But, GST alone isn't the reason trade was affected. A number of sources said that business has remained affected ever since demonetisation because the supply of money was affected.
In Goa and in other parts of India as well, a high number of traders do business without issuing a bill and accept only cash. First, demonetisation affected their business badly and later GST compounded their woes, as bills are necessary to get input tax credit.
Sunil Mehta, director, Chemtech Industries, said, "The market did pick up in August after a slowdown in July. But, it wasn't really thriving the way it used to be around Ganesh Chaturthi festival in the earlier years."
He continued, "People really didn't know what to do in June and July. A lot of dealers weren't even registering on the GST network. Our July business was 50 percent down compared to last year. But, August is not as bad as July."
Mehta is into chemicals like thinners and wood-polish. The fact that the market didn't pick up even around festivals in August did baffle a lot of business-people.
An owner of a garment store in the heart of Panjim, on the condition of anonymity, said, "For entire month of August, my business was 50% down due to GST implementation."
His store was also offering 30% discount around Ganesh Chaturthi, but that didn't help in improving the business. In fact, on the eve of Ganesh Chaturthi on August 24, only shops selling decorative material and sweets were able to get sizeable number of customers. Most of the remaining shops
did lesser business than they do otherwise.
Just like garment trade, discounts didn't really help other businesses in registering a significant growth in sales either. Automobile dealers, for instance, were offering various kinds of discounts throughout August, but still, the response from customers remained less than expected.
Prashant Joshi (a dealer of Hyundai), said, "The car market was better in August than in July. But, I would personally say that sentiment is not as good during Ganesh Chaturthi festival compared to previous year. In fact, the slowdown has affected entire country."
Most businessmen echoed Joshi's sentiments that even though trade in August was better than in July, but it was lesser than August 2016.
