Ahead of the 43rd GST Council meeting tomorrow, Nilesh Shah, Managing Director of Kotak Mahindra Asset Management company has appealed to the GST Council to consider a time-bound rate cut to boost consumption that will have a positive impact as consumers will prepone their expenditures.
"We have seen that when states announced concessions on stamp duty, consumers preponed their real estate purchases. So if GST Council gives this time-bound rate cut relief, people will prepone their purchasing that will boost consumption," Shah told ANI.
He said this will result in higher consumption creating higher jobs which will lead to higher demand and added that time-bound rate cuts should be done at the best time when the economy is open and businesses are back on track.
He said the impact of the second wave of COVID-19 on the Indian economy will be lesser than the first wave.
"The first wave had seen complete lockdown but in the second wave, we have done only regional or rotational lockdowns. Reserve Bank of India has also said on Thursday that India's economy has not moderated to the extent it did during the first wave but uncertainties can act as a deterrent in the short term," Shah said.
"But if we compare cases then the second wave is four times bigger and the death ratio is also three to four times more. It is difficult to say how much it will impact the economy this time. It is also difficult to say whether people will come out and start purchasing things like last year as the second wave has more impact. We may not see the pent-up demand like last year. We are yet to assess the impact of the second wave on people as after urban India it traveled to rural India," he added.
Shah said the medium and small entrepreneurs were the worst hit in the first wave. "They were trying to recover when the second wave gave them a double shocker," said Shah, adding that the government should come forward to support them.
Noting that the central government had last year announced fiscal support package for MSMEs, he said if such package is announced this year too, these enterprises will not face problems as they faced last year.
He also said monetary stimulus package announced by RBI last year is still on.
"What happened in the United States, interest rates have shot up to three times, but here in India with good management by RBI, interest rates have not seen a rise. Interest rates are stable, liquidity is enough, credit growth is good, an announcement for health care infrastructure of Rs 50,000 crore has been already done by RBI. COVID-19 cases are coming down, once the second wave is under control, then we can see a fiscal announcement by the government," he added.
( With inputs from ANI )
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