Why Modi, Jaitley will take time to get Indian economy back on track, restore high GDP growth
The festive season is on but unlike before, Sushil Aggarwal, owner of Ghaziabad, Uttar Pradesh based Avon Modplast, a moulded plastic furniture manufacturing company has yet to see a jump in sales. Orders from rural and semi urban parts of North India remain subdued. Capacity utilisation is hardly 40 per cent. "Consumers are confused, and sentiments are down", complains Aggarwal.
Animesh Saxena, who runs Neetee Clothing, an apparel export unit in Gurugram, Haryana says the supply chain in the apparel and textile sector is in trouble with the introduction of the Goods and Services Tax (GST) regime. "Unless urgent measures are taken, a revival of textile exports seems very difficult," he warns.
Sunil Harzai, of Noida based Sidharth Exports, an established leather products manufacturer believes discriminative tax policies are turning the sector non competitive. His sales are down 35 per cent and capacity utilisation 40 per cent.
It was the macro level impact of problems highlighted by the likes of Aggarwal, Saxena and Harzai among the millions operating Small & Medium Enterprises or SMEs across the country that was high on the agenda of the re constituted Prime Minister's Economic Advisory Council (EAC) on 11 October and the 22nd meeting of the GST Council on October 6.
With first quarter GDP growth figures at 5.7 per cent the slowest in three years fixing the economy was top priority for the government. The focus areas of the EAC, chaired by Niti Aayog member Bibek Debroy, include economic growth, job creation, informal sector, patterns of consumption and production, among others. It is focusing on critical interventions to accelerate economic growth and employment over the next few months, with greater social and financial inclusion, based on rigorous analysis.
The GST Council meet focused on the problems of small units. Finance minister Arun Jaitley did not disappoint. The GST council eased the compliance burden on small and medium businesses and exporters through fewer tax filings, reduced rates on 27 items, talked about introducing an e wallet system by April 1 for faster input credit, and
