GST likely to halt economy, says Avendus' Holland

Mumbai: Even as the economy is getting itself together post-noteban shock, the implementation of goods and services tax (GST) is also likely to cause serious disruptions, Avendus Capital Alternate chief executive Andrew Holland said today. "Valuations are challenging. We are seeing early signs of pick-up from demonetisation but its not a V-shape pick-up and will not be a V-shaped recovery" Holland told reporters here.

In a V-shaped decline, the economy suffers a sharp but brief period of decline with a clearly defined trough, followed by a strong recovery. "GST implementation has the real risk of again halting or having shock effects on the economy... these are the short-term challenges to the economy," he added. "Large companies may understand how to implement GST but we are not so sure about small and medium enterprises," he added.

Further, he noted that while various financial experts have pegged earnings growth at 20 per cent for fiscal 2018, it is likely to be lower at 10 per cent considering the many downside risks. GST will replace a jumble of levies to create one of the world's biggest single market. A single tax will make it easier to do business in the Asia's third largest economy as also help combat evasion, boost revenue for the government. The new taxation regime is likely to be rolled out from July or latest by end September.