GST rate cuts are here - but price adjustments are lagging at small retailers

Mint reported on Saturday that Finance Minister Nirmala Sitharaman said that since September 22, when GST reforms were implemented, the government has been closely monitoring the price trends of 54 daily-use items to ensure they are available to consumers at lower prices. “In no case has the benefit of tax reduction been passed on to consumers,” Sitharaman said. India has around 73 million unincorporated businesses, but only 15 million businesses are registered under GST, highlighting that a large part of the economy remains informal. The number of unincorporated businesses engaged in trading is estimated to exceed the total number of GST registered businesses in the country. Queries sent to the finance ministry on Thursday and to Hindustan Unilever Ltd., India’s largest fast-moving consumer goods company, remained unanswered. The Confederation of All India Traders (Cait), which represents 90 million traders and small businesses across the country, said the trade body fully supports the objective of ensuring that the benefit of GST rate cuts announced by the government from September 22 is effectively passed on to consumers. “Cait has already started an extensive awareness campaign across the country to educate traders about the revised GST rates and the importance of adjusting retail prices accordingly,” he said. Cait added that he has issued advisories to all of his state and local trade associations urging merchants to relabel or display revised prices wherever possible. A large section of the traders are unorganized and small sellers may take time to adjust to the new price framework, the association said, adding that it is working with the government and GST authorities to bring them into the formal fold. “We are confident that as existing stocks are exhausted, full pass-through of GST benefits to consumers will occur. Cait remains committed to facilitating a smooth transition at the retail level and ensuring that both traders and consumers benefit equitably from the government’s reform measures,” added Cait.