Seeking a temporary reduction in GST rates for passenger vehicles to perk up the demand, which has been on a downward trajectory for quite some time now, Mahindra & Mahindra Managing Director Pawan Goenka said on Friday that the move will keep the demand cycle going.
Stating that there were no "big bang" announcements in the Union Budget for the 2019-20 fiscal year, Goenka also said that the total impact of the budget will depend on how it will translate into ground reality. "There was no big bang expectations because there was not too much fiscal room to manoeuvre and there were no big bang announcements," Goenka said.
The domestic auto industry has been on the decline since September 2017.
"The biggest impact in the short term might come from the announcement of the banking sector reforms as both PSU (Public Sector Undertakings) banks and NBFCs (Non Banking Financial Company) have been proposed to be recapitalised. That is going to make a huge impact as that should improve the availability of retail financing. Hopefully, will also reduce the rate of financing and that will certainly give a demand pull," he said.
The total impact of the budget will be depend on it translating into ground reality, he said. Other than that there is nothing much which can have short-term demand impact, he added.
Asked whether he was disappointed by the Government not announcing reduction of GST on passenger vehicles, Goenka said, "given that there is not much room for maneuvering available for the revenue generation, I don't think it will be practical for the government to permanently reduce GST rate. But what could be considered and I think that is needed is a temporary GST relief," he said.
He said that the government could look at rolling back the GST to pre-relief period at the end of the six months period before readjusting it around April 1, 2020, the time when the BS-VI emission norms will come into effect.
On the budget proposal of electric vehicle buyers availing loans for their cars eligible to save up to Rs 1.50 lakh in terms of income tax, Goenka said that though it is not yet clear whether such a provision is applicable for fleet buyers also or only for the personal buyers.
He said considering all the measures which the government has announced in the recent past as well as in the 2019-20 budget including incentives for setting up various local manufacturing of inputs to EV and benefits for charging infrastructure to promote the sales of electric vehicles," the government has done (all) what it could could do."
"Now the onus is on the industry and the service providers to make the electric vehicle dream happen," Goenka said.