Economic experts have been closely monitoring the impact of the Goods and Services Tax (GST) on various sectors of the Indian economy. While there were initial concerns about the short-term effects of this major tax reform, Franklin Templeton Asset Management (India) President, Sanjay Sapre, has recently made a bold prediction that the country’s earning growth will see a revival from the next quarter onwards. He believes that the recent cut in GST rates will have a positive impact on consumption, leading to a boost in the overall economy.
In a recent statement, Sapre highlighted that the reduction in GST rates has already started to stoke up consumption across sectors. This is a significant development as the consumption trend has been quite subdued in the past few quarters. With the festive season just around the corner, this move could not have come at a better time. It is expected to provide a much-needed impetus to the economy and increase consumer spending.
The implementation of GST was a major step towards creating a unified tax system in the country. However, the initial months were met with some teething problems and uncertainties. This led to a slowdown in the economy, with many businesses struggling to adapt to the new tax structure. But with the recent rate cuts, the government has shown its commitment towards addressing these issues and providing relief to businesses and consumers alike.
The reduction in GST rates has been across various sectors, including automobiles, consumer durables, and FMCG products. This will directly impact the prices of goods, making them more affordable for consumers. As a result, there will be an increase in demand, leading to higher production and sales. This will not only benefit the businesses but also have a ripple effect on the entire supply chain, ultimately boosting the economy.
Moreover, the GST rate cuts have also been extended to small and medium enterprises (SMEs) with an annual turnover of up to Rs. 1.5 crore. This will provide a much-needed breather to these businesses, which have been facing significant challenges in the past few months. It will not only help them in reducing their tax burden but also provide them with the necessary liquidity to invest in their growth.
Sapre also believes that the cut in GST rates will lead to increased compliance and a reduction in tax evasion. The simplified tax structure and lower rates will encourage more businesses to come under the GST regime, leading to a wider tax base. This will ultimately result in higher tax collections for the government, which can then be utilized for the development of the country.
The positive impact of the GST rate cuts will be seen across various sectors. The automobile industry, which has been facing a slowdown in recent months, is expected to see a surge in demand. With the reduction in GST rates, cars, two-wheelers, and commercial vehicles will become more affordable, leading to an increase in sales. This will not only benefit the automobile manufacturers but also have a positive effect on the ancillary industries and the job market.
Similarly, the FMCG sector, which has been struggling with the implementation of GST, will also benefit from the rate cuts. With lower taxes, the prices of fast-moving consumer goods will come down, making them more accessible to the masses. This will lead to a rise in consumption, resulting in increased production and job creation in the sector.
In conclusion, the recent cut in GST rates is a significant move by the government towards reviving the economy. It will provide a much-needed boost to the consumption trend and lead to an increase in earning growth. The move is also expected to bring in more transparency and compliance in the tax system, ultimately benefiting the country’s overall economic growth. As we enter the festive season, this positive development will surely bring a ray of hope for businesses, consumers, and the economy as a whole.
