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Demonetisation, GST may impact Indian business by 10-15 per cent
October 24, 2017
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NEW DELHI: Demonetisation, along with recently introduced Goods and Service Tax (GST), may impact the business of upcoming wedding season, staring November, by 10-15 per cent, industry chamber Assocham said on Monday.

Wedding services like marriage garden/marriage hall booking, tent booking, confectionery services and photography are expected to get impacted.

At present the Indian wedding industry is about Rs1 trillion and is growing at 25 to 30 per cent annually. The estimated cost of a wedding with no expenses spared could be between Rs3 lakh to Rs8 crore.

“It is being estimated that the average cost of many wedding services like shopping, tent booking, food services, etc., is higher due to GST. The GST rate on most of these services is from 18 to 28 per cent. Before GST, most of the wedding service businesses like tent services, confectionery booking, etc., were using unregistered bills on which they didn’t have to pay any tax,” the chamber said.

However, Assocham said destination wedding or the wedding tourism sector in India which accounts for less than 10 per cent share in the overall industry is not likely to face much adverse impact of GST and demonetisation as it is already a very costly affair which mainly lures foreigners, NRIs, rich and famous people for exotic weddings at beaches, royal palaces and adventurous places.

Meanwhile the immediate impact of demonetisation was seen in the long queues outside ATMs and felt through acute cash shortage, its anniversary is an appropriate vantage point to assess the less visible and generalised effect on the economy of what was easily the most disruptive measure post-Independence.

The difficulty in making a cost-benefit analysis is that the move was not purely economic, given the fact that the currency issuer Reserve Bank of India (RBI) had no role in the decision, as testified by former Governor Raghuram Rajan.

So demonetisation comes across more as a measure of political economy with the declared objective of curbing black money and countering counterfeiting and terror finance, and which appeared to have paid political dividend to Prime Minister Narendra Modi in the Uttar Pradesh elections this year.

Starting with the official figures, at the end of May, the Central Statistics Office announced that GDP during the fourth quarter, ending March this year, fell sharply to 6.1 per cent from seven per cent in the previous quarter, while growth for the year as a whole was also expected to decline correspondingly. India’s GDP during the past fiscal grew at 7.1 per cent, at a rate lower than the 8 per cent achieved in 2015-16.

In terms of gross value added (GVA), which excludes taxes but includes subsidies, the growth came in even lower at 5.6 per cent over the GVA for 2015-16.

Indo-Asian News Service

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