Pankaj Gupta, a managing partner of Paisa Worth, a medium-sized enterprise in Haryana’s Panipat city, is a worried man. The festival season—October to January, spanning Dussehra, Diwali, Christmas and New Year—is usually the busiest time of the year for him. These four months account for eighty percent of Paisa Worth’s annual sales. The company sells bed sheets, carpets and doormats, and has clocked sales of around twenty crore rupees during previous festival seasons. Not this year. As he peered over sales orders on his laptop, Gupta told me that business was down “by 60 percent and we will be lucky if we can sell five crore rupees worth of goods.” This year, the company had to lay-off nearly eighty percent of its employees, and Gupta was doubtful whether the firm could afford to pay the annual Diwali bonus to the remaining 70 workers. “Business is down, my revenue is down and my blood pressure is up,” Gupta said, as he lit a cigarette and took a deep drag in his air-conditioned office.
On the other side of the city, Shyam Singh Malik echoed Gupta’s concerns. Malik runs a medium-sized enterprise that manufactures textile-weaving machinery. His business infrastructure includes two manufacturing units, two spare-parts trading units and a foundry. Malik told me that his business was down by seventy percent, primarily because “demonetisation and the Goods and Services Tax” have had a crippling effect. “There is no liquidity in the market because of GST and we are finding it hard to raise capital,” he said.
Twenty kilometres from Panipat, in the town of Samalkha, Kuldeep Arya had a similar tale. Arya is a manufacturer of nuts and bolts, and has been in the business since 1994. He said that this year, his business was facing the worst downturn he had ever seen. Arya told me that before the GST, “my company’s credit limit at the bank was Rs 30 lakh,” but he had been forced to raise it to Rs 1.1 crore because there was a liquidity crunch in the market. He, too, blamed the GST—his firm’s monthly turnover is around Rs 50 lakh and he has to deposit Rs 9 lakh as GST by the twentieth of each month. “It’s the same with every company. The liquidity is being deposited with the government and there is nothing in the market.” Arya has to pay a GST rate of 18 percent, significantly higher than the five percent value-added tax that he used to pay.