GST 2.0: Raamdeo Agarwal Forecasts Bumper Second Half With Boost To Credit Flow

Market veteran, Raamdeo Agrawal, believes that the market will need time to digest the magnitude of the GST reform but expects a strong second half to the financial year. In an exclusive interview to NDTV Profit, he added that the auto sector would be the most impacted.

On Wednesday, the GST Council approved a two-tier rate structure of 5% and 18%, replacing the existing four major slabs — 5%, 12%, 18%, and 28%.

This is seen as a major pre-festive bonanza where taxes on a wide array of goods from household staples and life-saving medicines to small cars and consumer appliances will be significantly reduced starting September 22.

Agarwal further added that GST reforms have attempted to simplify the overall tax structure and that the finance minister and government are aiming for an increase in credit flow.

"We have credit flow due to the CRR cut, and now the GST cut will also increase the liquidity and credit flow", he told NDTV Profit. Inflation, which is the main concern of the Indian economy, is well under control, Agrawal said.

"We will see a bumper second half and a good monsoon," he remarked.

Speaking about the GST cut on auto, Agrawal said, "The biggest impact will be on the auto sector as 50% of manufacturing comes from this sector, he further quoted an auto dealer saying, "Won't be able to match the demand due to the GST cut."

"There is enough competition among banks to ensure credit growth", Agrawal said, adding that "banks will play a key role in GST revamp".

The Government needs to make sure that there is enough credit flow, and the power of the Rupee will keep increasing as the taxes are reduced, Agrawal summarised.