It has been almost a year since demonetisation took place and three months since the Goods and Services Tax (GST) Bill was introduced in India. The after effects of these two initiatives are being felt in different sectors of the economy. While demonetisation created an air of urgency to get rid of black money in the economy, GST brought about a lot of confusion, especially amongst smaller businesses.
Sarika Shinde, 35, is a wholesale vendor at Kumbhar Wada who imports diyas and other handicraft items from Gujarat, Rajasthan and Kolkata. “This year, according to me, the market is 75 per cent lower than last year. The price of a diya, which used to be at Rs 2 earlier is now up by 20 paise. Every year by this time I would sell one lakh diyas but this year I have only sold 30,000 diyas. There is GST on paints and on plaster of Paris (POP). A small plastic container of paint which used to sell earlier at Rs 4 is now selling at Rs 7.”
Select handicraft items have different rates of GST on them. However, there is no tax on soil which doesn’t change the price of diyas and idols but there is tax on raw materials like POP, plastic and paints used to design them.
Another vendor at Kumbhar Wada, Mahesh Shinde claims that he has not been affected by GST as his business is under Rs 20 lakhs, which means that vendors like him need not register or file returns. “Customers are slightly lesser compared to last year. There hasn’t been much change in the price of the items we sell. It’s been more or less the same since the past 15 years. Our business is seasonal. But, the cost of transportation has gone up by Rs 2000 due to the hike in fuel prices.”
According Arundhati Agte, Assistant Professor, Department of Economics, S P College, these effects are felt by the vendors not so much due to GST but more so because of the overall slowdown in the Indian economy. “The effects of demonetisation are still being felt here. These vendors do not have to pay GST and there is no GST ON soil either. The economy over all isn’t doing too well. Fuel prices have not increased due to GST because that sector isn’t included. Fuel prices have increased due to government policy. Every year, prices of such items will rise. Probably this year, consumers will spend lesser and the demand for such items might have reduced. But this isn’t necessarily because of GST. Though, the case might be different for handloom and textiles,” she explains.
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