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GST On Cars, Bikes To Be Brought Down? Here’s What Analysts Say

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In the run-up to India’s annual financial statement, the Union Budget, has begun. The spotlight is now on India’s first full-time woman finance minister, Nirmala Sitharaman, and whether she will deliver on the much-needed reforms to boost growth in the economy.

As the country’s auto sector grapples with a consistent slowdown with passenger vehicle sales down over 20 per cent in May – the highest percentage de-growth in 18 years, Deven Choksey, managing director, KR Choksey Investment Managers, told NDTV: “The GST on the auto sector could possibly be brought down to boost growth and reduce unemployment. GST on cars, bikes and scooters currently stands at 28 per cent – there is a strong case to bring it down and if done this will give a big push to the auto sector.”

While some experts remain hopeful, others feel it may be too little too late.

“The auto sector is a very important contributor to the manufacturing part of India’s GDP. Various policy moves and the NBFC liquidity constraints have led to the de-growth in the auto sector,” said Ajay Bagga, executive chairman, OPC Asset Solutions.

“A 2008-like tax cut is what the industry hopes for, but we are skeptical of this. As such we see weak growth in the auto sector for fiscal year 2020.”

While the auto sector dominates the wish-list for now, experts also feel a relief to the salaried taxpayers and further rationalisation of GST rates will benefit all.

Many experts also remain hopeful of a fiscally prudent, welfare-oriented Budget, with a focus on distributive income, infrastructural and ease of living.

Mr Bagga said he expects the second half of the current financial year to see a rise in Nifty earnings. He is positive on private sector banking, consumer discretionary, cement manufacturers and IT stocks going forward.

Source: NDTV Profit