India's retail sector
has seen a major contraction ahead of Diwali, according to a NDTV report that surveyed heads of trader's associations of 10 major cities across the country.
Viren Shah of Mumbai's Federation of Retail Traders Welfare Association said that sales
have dropped 50% in the country's biggest financial hub.
The corresponding figures for other cities present a bleak picture. Sales
have reduced by 30% in Ahmedabad, 15% in Hyderabad, 30% in Chennai, 40% in Bangalore, 30% in Bhopal, cumulatively adding up to a 36% overall drop across the country.
The survey also asked respondents what they felt were the reasons. 100% said GST was responsible whereas about a third said that the Demonetisation's impacts have lingered on and continue to affect trade.
RBI's Consumer Confidence Survey for September 2017 says 40.7% of the surveyed people feel that the economic conditions have worsened this year as opposed to 25.3% last year. Moreover, 43.7% feel employment opportunities have dwindled as opposed to 31.9% last year.
BC Bhartia, National President, CAIT is quoted as saying that the 28% GST slab is a big dampener in the retail market. It discourages people from buying stuff like furniture. "Housewives aren't buying. They are waiting for the govt to reduce taxes."
However, General Secretary-CAIT felt that the RBI is to blame for the state of the retail market as it has failed to infuse enough cash into the market.
Jagdish Shettigar, an economics professor and a former Vajpayee aide, opined that the RBI can't be blamed as it has done the needful by bringing down the Statutory Liquidity Ratio(SLR), thus enabling banks to lend an additional Rs 57,000 crores. He felt that investors are unwilling to buy credit as there is no demand for goods.
Mahesh Vyas, Director of the Centre for Monitoring Indian Economy
(CMIE) said consumer sentiment has taken a beating. CMIE's latest data about the state of the economy says that consumer sentiment index has decreased by 4% since July and the unemployment level is at an 11-month high of 8.2%.
Expectations Survey of Households released last week 79% people feel prices will increase over the next three months and 86% feel things will get dearer over the next year.
Expectations Survey. Source: RBI website