Diwali lights get dimmed in Gujarat, thanks to demonetisation and GST

Photo Credit: TOI, Ahmedabad

-Abdul Hafiz Lakhani

Deepawali – the festival of lights is in dark as GST Is taking heavy toll of Small traders, businessmen and common men in Gujarat. Diwali is one of the most important festivals of Gujarat. While the rest of the country observes Diwali for two to five days, in Gujarat the celebrations go up to nearly a week. Every other state has holidays either on the main day of Diwali or maybe a day after or before Diwali, but in Gujarat, it is five days of holidays with extensive festivities and celebrations but this time, market slowdown has affected the mood of Gujarati people. This year, Diwali will be celebrated on 19th october, and next day will be new Hindu year.

“This is the worst Diwali of my career, since 1973. Even in the aftermath of 2002 riots, the sales were good,” says Mukesh Sheth, a leading trader at Ratan Pol, the traditional textile market of the city.

“If we ask a fellow trader about how his business is doing, we are just touching a raw nerve. Earlier, we would not have this time to interact with you. But now, most of the retail traders are sitting idle,” he adds.

Sheth is not an exception. Most traders in the market have the same story to tell.

Businessmen say that liquidity crisis induced by demonetisation nearly a year ago and GST that was rolled out on July 1 have robbed the small businesses, manufacturers, wholesalers, retailers, as well as consumers. The shortage of cash has also cut the demands from rural buyers. “There is about 70 per cent drop in consumers from villages in Saurashtra,” Sheth says.

Sheth is not an exception. Most traders in the market have the same story to tell.

Gaurang Bhagat, president of the Maskati Kapad Mahajan, which represents close to 50,000 textile and garment traders in the city, says: “Before demonetisation, the cash flow was intact. Now, the cycle has been broken. Consumers have become very measured and business is becoming increasingly unviable. Those who have taken loans are finding payment of installments very difficult. Businessmen, especially in the textile sector, were not given enough time to adapt to the new system.”

Pathik Shah, secretary of the Shree Choksi Mahajan at Manek Chowk, the traditional bullion, gold, and jewellery market in Ahmedabad, says that GST has not directly affected gems and jewellry sector but the slowdown it has caused in other sectors is reflected in the demand for gold.

Sales this year have dropped by 30-35 per cent, compared to last year, says Shah. Normally, sales for the marriage season begin in Navratri, soon after the Shraadh period. But this year, the situation is different.

It was only on Pushyanakshatra, on last  Friday, that markets came out of the gloom. Even then, sales were lower as compared to last year. Now, all hopes are pinned on Dhanteras, which falls on Tuesday. There are fears that even the upcoming marriage season may not be up to the mark.

Sunil Motwani, president of the Relief Road Electronics Market, says that in addition to other factors, the sector is also hurt by discounted sales on e-commerce market places and organised retailers, who can buy at discounted price, a bargain not possible for small shop keepers. Sales at traditional shops have dropped by nearly 70 per cent.

(Abdul Hafiz Lakhani is a senior journalist based in Ahmedabad. He is Editor of Gujarat Siyasat.)

Liked it? Take a second to support Abdul Hafiz Lakhani on Patreon!