Sitharaman's relief package likely to boost festive cheer for durable firms

Top executives of durable firms have expressed hope that the measures announced on Friday to revive economic growth would help boost sentiment in the run-up to the period from Dussehra to Diwali, which is about two months away. The move to inject liquidity into the system, coupled with rate cuts announced by the central bank, will help consumer finance in the festive season, they said. 

“The immediate release of Rs 70,000 crore to public sector banks (PSBs), in addition to repo rate cuts introduced earlier, will increase liquidity in the market enabling greater lending,” said Kamal Nandi, executive vice-president and business head, Godrej Appliances. “Sentiment will also improve as we go into Dussehra-Diwali, which falls in October.” 

Finance Minister Nirmala Sitharaman had said on Friday the government was working towards simplifying the goods and services tax (GST) further apart from providing relief to sectors grappling with a slowdown and easing the liquidity crunch.

The move to recapitalise banks, she said, would generate Rs 5 trillion in additional lending in the financial system. While the festive season in India kicks off with Onam in Kerala, Ganesh Chaturthi in Maharashtra and Durga Puja in Bengal, it is Dussehra-Diwali that is considered the peak period of the season. 

Together, the festive period, which stretches from September to December, when Christmas and New Year arrive, gives durable companies around 30 per cent of their annual sales.

This year, the dependence on Dussehra-Diwali, however, has grown due to the floods in Kerala, Maharashtra and other parts of India. 

Pradeep Bakshi, managing director and chief executive, Voltas, says he doesn’t expect Onam to be strong this year owing to the floods. “Most people are focusing on rebuilding their lives. So, Onam will not be a huge celebration there. But given that we are a month-and-a-half away from Dussehra and two months away from Diwali, I think the measures announced by the Finance Minister are welcome. This will aid sentiment,” he said. 

Some other chief executives are also expecting more measures to be announced in the coming days to bring further relief to consumers and businesses. “Further simplification and rationalisation of the GST will be something that most companies will be looking forward to,” said B Thiagarajan, managing director, Blue Star. “I remain hopeful.” 

In the past two years, the GST Council has rationalised the 28 per cent tax slab and restricted it to luxury, demerit and sin goods. Also included in the 28 per cent tax bracket are items such as cement, large-screen television sets, air conditioners and dishwashers.

TV makers as well as air conditioner manufacturers have long demanded that GST on these products be reduced to 18 per cent, much like washing machines and refrigerators, where GST was cut by 10 percentage points last year.