Anjan Chatterjee

Demonetisation in November, 2016 was a great effort with a very positive vision, but I guess the effect of it was not very well envisaged. As we understand, many businesses suffered because the cash economy was put on hold. Consumption and discretionary spends went down and obviously our industry, being a peripheral one, also got affected.

The good and the bad

I would say that the negative effect of demonetisation might have died down, but there has not been any positive impact as yet. Now talking about GST, it was a great idea to begin with. We all welcomed it because it was great to have a ‘one India one tax’ policy, which was supposed to solve a lot of our complexities, as far as operations were concerned. We operate in 22 cities and all their tax structures were different. Thus, we had to make different menus for different cities, and so on and so forth.The other good thing when the tax was initially announced was that the input credit was made available to its full extent, which was not available earlier. But before we could file our first return, the government felt the need of turning the wheel back and the 18% returned to 5%. Now you see, the input tax which was a very good decision by the government was reversed, and as a result, we, or rather, the industry stands to lose a lot of money which will affect the bottom line adversely.

So, on the one hand what was happening was that your tax came down from 18% to 5%, so 13% went to the advantage of the consumer. But to think of it, when the tax was 18% there was also an input tax credit of about 8-9%. The consumer was paying this input credit towards government taxes above the tax credit. But now it is only 5%, which will adversely affect the bottomline. However, we are waiting and watching till the first returns are filed to see what the actual impact would be. We are also hoping to see some upward consumption which has not happened as yet, but being a seasonal time, we might be able to pull in more footfalls.

If this happens, the negative impact which has affected our bottomline will get nullified. We also thought that the GST with the input credit would give us a level playing field. The unorganised sector may not necessarily have been monitored as far as sales tax regime is concerned, and it will have to adhere by the laws strictly. This will help the government to increase the revenue and provide a level playing field for players who have been totally compliant for the past 15-20 years.

Organised vs unorganised

I think it is very important for the unorganised sector to come at par with the organised sector so that the latter can expand or create expansion plans in a growing economy, with the assurance that the government will have a very soft or encouraging view on us. All said and done, an organised sector would not be able to keep up with hygiene standards, labour laws, tax regimes, etc. It is important that the organised sector comes with public investment, especially from people who have also invested in the share market so that the benefit of the growing economy is also enjoyed by the citizens who are keen to put in their money in stocks.
If I look back, 2017 has not been a very happy year for us. We feel or rather we wish that in 2018, things will look more promising with the industry GDP growth at 6.3%, and the growth moving to 7% in the next quarter. If this rises to 9-10% with job creations, then our industry would be able to benefit more.

Writer is founder, Speciality Restaurants