GST IS DONE…NEXT WHAT????

By Ruma Dubey

From now onwards, be assured that the Modi Govt will make moves with an eye on 2019 – the election year. Yes, with no real opposition in sight, another term, at least as of now looks certain. Thus all the reforms which we will see from the Govt will be all about vote bank – they will work on retaining their thumping majority of 2014 or even better, increase it.

A lot of the promises made have to be fulfilled and major amongst them will be employment. The big achievement will undoubtedly be the rolling out of the GST and after that, all focus of the Govt will now be on creating employment opportunities; after all wasn’t that the winning mantra played on the huge population of ‘youngistan?’

We still do not have any official monthly or even quarterly data coming in on employment. The BSE website does make a mention (right above the BSE Sensex at the top) and this is in collaboration with Centre for Monitoring Indian Economy (CMIE). The moving average rate as at 2^nd July 2017 for overall India is at 3.45% while urban is at 4.48% and rural at 2.91%.

At the same time, there is data given on Consumer Sentiment Index, which stands at 96.65%. Data with the CMIE shows that for the week ended June 25, the index of consumer expectations was 3.5% lower than the index of current economic conditions. Since both indices have the same base period in September-December 2015, it is apparent that the expectations sentiments have worsened more than perceptions of current conditions. What it suggests is that the Indian economy is unable to deliver and that expectations are belied.

The Modi Govt is very very clued into every such data which comes out and surely, they must have made a note of this, which is why, going ahead we will see the Govt trying its best to boost this Consumer Sentiment Index. And this is linked to good agriculture commodity prices in rural India and employment in urban India. Rural India will hopefully have a rich, bountiful harvest and this will in turn get them good prices and of course, loan waivers are the ultimate sentiment boosters!

The young and unemployed are growing restless. One more summer has gone by which means another new lot of young graduates and post graduates will join the teeming multitude of those seeking jobs. Ironic isn’t it – we are one of the fastest growing economies of the world and yet, employment generation, which was last recorded by the Govt in 2015 was at 1,35,000 – that’s the number of new jobs created in the organized sector while some 120 lakh or 1.2 crore new entrants have come into  the workforce.

Thus if all work is now to be done with an eye on the vote bank for 2019, employment generation will be the next big thing. 41% of India’s 1.3 billion population is below the age of 20 – that’s a huge discontent population to have.

While the immediate agenda would be to ensure GST creates minimal disruption as this could have a serious backlash, the overall roadmap would be to bring about administrative reform and not structural. Demonetization and now GST have created enough confusion so any more major upheavals are not expected. Modi Govt will want to ride the crest holding to the tailwinds of GST – the stock markets have already given it the thumbs up.

PS: there are murmurs of the Govt planning to change the financial year from April- March to Jan- Dec next year. In our opinion that is another major disrupter and might get annonced but not done in current term as the financial world would still be adjusting to GST.