GST has negative effect on services’ sector
DSIJ Intelligence / 03 Aug 2017
Goods and Services Tax (GST), introduced in July, has impacted the country’s services sector. The Nikkei India Services Purchasing Managers’ index fell to 45.9 in July, the lowest reading since September 2013.
Goods and Services Tax (GST), introduced in July, has impacted the country’s services sector. The Nikkei India Services Purchasing Managers’ index fell to 45.9 in July, the lowest reading since September 2013. June’s figure was 53.1.
Almost 23% of survey participants reported lower output, which they commonly associated with falling new orders and the introduction of the GST.
Business conditions in India’s service economy deteriorated markedly in July following the implementation of GST. Output and new work declined for the first time since January, with rates of reduction the quickest since September 2013.
This had an adverse effect on the labour market, with employment contracting over the month. That said, firms expressed a lack of knowledge regarding the GST and expect more clarity in the near-term to lead to activity growth. Confidence for the year ahead was, in fact, the strongest since August 2016.
A reading above 50 indicates economic expansion, while a reading below 50 points toward contraction.
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