HYDERABAD: With just a few days left for Diwali, retailers across sectors in the city are witnessing lower pre-Diwali sales than last year due to lower consumer spending. Retailers blame nervousness among consumers post Goods and Service Tax (GST) implementation for the drop in demand. Items such as mobile phones, jewellery, sweets and gift items are all witnessing lower demand. “Business is thanda (slow) this year,” said Ravi, manager at Bandhan Mithai Vatika. “Gift boxes of dry fruits have become costlier due to 12 per cent GST. Items with chocolate in them are taxed at 28 per cent. Maybe it is because the Diwali falls towards the month-end and people don’t have cash to spend,” added Ravi.
The automobile sector, which saw huge price cuts post GST, has come up with various offers to increase footfall. While a few car and bike showrooms have come up with discounts, others are trying to woo customers with scratch cards, lucky draws, gifts and even free insurance coverage. For jewellers, the sales had been dull for Dasara due to the Prevention of the Money Laundering Act (PMLA). With the notification of the Act, jewellers are now subject to anti-money laundering law. “There was a drop in footfall during Dasara.We are expecting better footfall in the days leading up to Diwali as it is considered auspicious to buy gold during this festival,” said a manager of a large jewellery chain store near Begumpet.
The Reserve Bank of India (RBIs) Consumer Confidence Survey for September 2017 found that 40.7 per cent of those surveyed felt that the economic conditions have worsened this year, as against 25.3 per cent recorded in 2016 survey.
“GST has made both the customer and the trader nervous. People are spending less as most essential items have become costlier. People focus more on putting food on the table than buying gifts and gadgets,” said Dilip Kumar Pansari, honorary secretary, Hyderabad and Secundrabad retail dealer association. “Leading up to July, big manufacturers stopped delivering new stocks as they wanted to get rid of pre-existing stocks. So purchase by small traders stopped, the trend change started in June and has continued,” he added.
“Many traders are yet to get used to the GST norms and many more are yet to register themselves. Those who have not registered are struggling to procure goods and those who have registered are selling without adding GST as they haven’t fully figured out how the system works. They would rather face the loss than face a rap from the taxman,” added Pansari.