Mumbai: The lights appear to have dimmed this Diwali, thanks to increases in prices of food, clothing, fireworks and gifting items after the imposition of the Goods and Services Tax (GST). Together with inflation and the after-effects of demonetisation, traders say financial reform has done more harm than good.
In Crawford and Mangaldas markets and Zaveri Bazaar, the city’s busiest markets, traders say GST has dampened the festive mood, a complaint echoed by smaller wholesalers. All report lower footfalls and drop in business. Sellers in Crawford Market say the problems due to GST are many. The proprietor of Hakimi Stores, who declined to be named, said grocery sales have been hit. “Some bills from companies include GST, some don’t. This is creating confusion among customers as well as us; we’re unable to answer buyers when they question the increase in prices. Many just leave without buying anything,” he said.
Mukesh Gala, who runs Royal Foods, said the dry fruits and mukhwas business is down by 40%. At P&H Electric in Lohar Chawl, Kalbadevi, proprietor Harshal Mundada blames GST for its impact on the consumer and electronics business. “Our profit has gone to the government, but it’s Diwali and the demand for electronic goods is expected to increase despite the high cost,” he said. Some like Urmee Kapoor, a fashion designer with a store on JVLR, are tackling GST differently. “I’m not charging GST from my customers. The cost of fabric has increased and there is a lot of pressure, but I don’t want to lose my customers. It’s a headache to file accounts at the end of every week.”
Fireworks
Fireworks sales have taken a 60% hit, say traders at the popular Ulhasnagar wholesale fireworks market. “Apart from GST and demonetisation, ban on Chinese fireworks, rains, and an early Diwali have also contributed to poor sales,” a trader said.
Before GST, fireworks were taxed at 14.5%; this has gone up to 28%. “We have to file returns thrice a month or almost 37 times a year; earlier, it was just once a year. I see no good in this. Our tolerance is being mistaken for acceptance,” Haresh Motwani, a trader at the market, said.
Frustration among sellers is apparent: with just four days to go for Diwali, there are few customers through the day. The situation improves somewhat in the evening. Kamlesh Jaisinghani, a shopkeeper, said, “Only today do we have a full house. An early Diwali is always tough on us, but this year, the government and the weather are also responsible.”
Less variety in fireworks is also adding to low sales. “Placing a standard order felt like a gamble because we are aware of rise in cost due to GST, and cheaper Chinese fireworks are not available. The after-effects of demonetisation are still strong a year down the line. Cash flow has gone down by 35%,” Mr. Motwani said.
In Ulhasnagar every year, 15 days before Diwali, small seasonal vendors come together and organise a fireworks sale at Golmaidan. The sale was known for variety in products. This year, weather and GST have reduced it to a five-day affair that began on Monday.
Gold and jewellery
Rajeev Popley of Popley and Sons in Opera House said, sales have gone down by 50%. “The tax we pay is 10% on all items. Walk-in customers have reduced .”
However, the Mumbai Jewellers Association (MJA) is bullish. Kumar Jain, vice-president, MJA, said there was a big fall in business during Dusshera as customers were reluctant to share identity details while buying jewellery for more than ₹50,000. Identity proof has been made mandatory since last month under the Prevention of Money Laundering Act. “The limit was raised to ₹2 lakh on October 2, so we’re expecting a 30% to 40% increase in sales over last year for Dhanteras.”
Clothing and dry fruits
Viren Shah, president, Federation of Retail Traders Welfare Association (FRTWA), said retail business has fallen by 50%. “The GST slab of 18% to 28% has resulted in high cost of garments,” he said. Ashok Patel, president, Fort Merchants Association, said people have no money. “Traders are unhappy with the confustion due to GST. Many merchants from Fort have left because sales are down. Clothing, sweets and dry fruits sales are down by 20% to 30% along with gifting items,” he said.
Customers complain
Across the counter, customers are just as unhappy. “I went to buy lanterns but ended up not buying any as they were selling at ₹260. Last year, they were available for ₹150,” Oindrilla Gupta, a student of Sophia College, said. “GST impact can be definitely felt on sweets, chocolates, dry fruits and gifting items. Shopping is turning out to be more expensive,” Deepa Mahesh, a Jogeshwari resident, said.
Shaili Contractor, who works with an advertising agency, has gone in for artificial toran s this year. “Due to GST, not only have prices increased, my sister’s new business has been affected.”
Shantanu Ray, a media professional, said GST has affected online buying. “I normally buy clothes online and the increase in prices is visible. I have deferred all electronic shopping to next year.”
Some, however, feel otherwise. “Diwali is Diwali I haven’t particularly felt the pinch this festive season,” PR professional Tanya Mishra said.
