The year 2017 was not a good year economically. The GDP is going down, due to demonetisation and implementation of GST. The production, as well as demand, has gone down and there is a big pressure on prices, in every area of activity. The overall business has gone down, due to reduced manufacturing activities which were hampered, by above decisions. It looks that year 2018 may do little better then 2017, for various reasons.
It seems that India is producing fairly good quality of various types of cotton, manmade and blended yarns, however, Indian quality is just considered as an average quality, as compared to Indonesia, where they are producing more value added yarns and commanding premiums by using contamination free cotton. Indian yarn industry is still reluctant to do it and hence globally Indonesian yarns are commanding premium over Indian yarns. It is merely a will power, which has to be improved.
After demonisation, of the old notes, the trade and business have converted their old currency, into new currency, by adopting various methods. Actually they play very important role in the whole supply chain system of trade and manufacturing. The activities in parallel economy have been greatly adversely affected, due to implementation of GST. No doubt that the implementation of GST was required and is a great job done by the govt. with lot of will power. It was certainly required, to give right direction, to the trade and industry, for giving proper shape to the Indian economy.
Unfortunately, the parallel economy is almost as big, as fair business economy and due to GST implementation, a major amount of money has gone out of circulation. This is what is affecting the business activity levels after implementation of GST. Although, the govt. had given an opportunity to traders and business people to declare their non-taxed income, before demonetization, but the amount declared under this scheme was not commensurate, to the total amount, being used in this type of trade and business.
It looks that still untaxed amount of money is huge which is lying unused and has gone out of circulation. Now, although it looks to be very difficult for the govt., to take any decision, for giving last opportunity to trade and commerce, to declare untaxed income with a very reasonable rate of tax including penalty. It seems evident that having no more choice, all such people will come forward to declare the undisclosed income by paying tax to the govt. It will be a win win situation for both trade and the govt, by which the entire undisclosed money will come in to circulation and certainly the GDP will be increased with lot of job generation.
It is a hard decision to be taken. Apart from this, the govt must give more and more subsidy and incentives to garment manufacturing industry, where we are lagging far behind, from even Bangladesh and Pakistan. Garment manufacturing, will certainly create enormous number of jobs, with much lesser investment in the textile industry.