Goa fighting brave battle in face of slowdown in Indian economy
Even as a number of national level indicators are signalling a downturn in economy, Goa is showing few signs of resilience. A number of industrial units are expanding, GST has made local manufacturers more competitive in the national market and two-wheeler sales revived just around Diwali
19th November 2018, 04:09 Hrs
It’s clear that there is an economic slowdown pan-India and closer to home in Goa things are not looking all that rosy due to mining shutdown. Interestingly in such a tight situation, Goan economy has shown few positive signs.
First of all, implementation of Goods-and-Services-Tax (GST) has made local manufacturers more competitive at the national level. Due to which, they find it easier to compete with their competitors, especially in the neighbouring states of Karnataka and Maharashtra.
Parag Joshi, managing partner Jutex and Laminex, said, “We supply jute bags for fertilizers, cement and sugar industries. In GST regime, if a fertilizer manufacturer in outside states like Maharashtra buys bags from us, he can claim input tax credit. This wasn’t possible in value-added-tax (VAT) regime. Thanks to GST, things are looking good for our industry.”
Due to buoyancy in demand, Joshi is expanding his manufacturing units in Verna and Sancoale. Like his industry, there are many units in the state, which sell their products outside of Goa and they all stand to benefit due to GST.
Apart from this, a number of other industries are in an expansion mode, which reflects favourably about Goan economy.
Damodar Kochkar, president, Verna Industrial Estate Association, said, “At national level, a lot of people are complaining about slowdown, but Goan economy is doing well. For example, many industries in Verna are expanding like IFB, Finolex, Sanofi and CommScope.”
Some of these industries have been in Goa for decades. The fact that they chose Goa for expansion shows that they find sense in investing in the state and within few years their investment will generate employment for locals and tax revenue for the government.
In fact, a lot of other industries are also willing to set shop in Goa but the state has limited industrial land. Now that 38 lakh square meters of land are going to come back to the state after resolution of Special Economic Zone (SEZ) related litigation, it seems that getting industrial land in Goa will become easier than earlier.
Another favourable trend for the local economy is the revival in two-wheeler sales. Vinay Kunkolienkar from Goa Rajee (dealers of Honda two-wheelers) said, “The market of two-wheelers has recovered around Diwali. Our Diwali sales this year was around 15% more than the last year. We hope that this trend continues.”
When asked about the reason behind recovery, Kunkolienkar replied, “Lot of people get bonus on Diwali, which has given a boost to the demand. The growth in sales is between 15 to 20 percent in areas like Salcete, Vasco and Ponda. However, in the mining belt of Sanguem and Sanvordem, growth is low at 1 to 2 percent.”
Areas like Sanguem, Quepem and Sanvordem have been particularly affected due to mining shutdown. But, even in these areas, the economic recovery is noticeable. In the first half of 2018, two-wheeler sales in mining areas had fallen by 30 to 35 percent.
Although there is a recovery, the experts feel that scope for improvement is tremendous in Goan economy.
Sandip Bhandare, president, Goa Chamber of Commerce and Industry (GCCI), said, “GST has definitely helped Goan businessmen. Whether they buy from outside of Goa or sell to other states, they end up making around 2.5% extra. But, sooner or later, other businessmen will realize this and they may expect Goan businessmen to give them 2.5% discount. In other words, this benefit may or may not remain in the long run.”
Bhandare continued, “In the long run, Goan industrialists will have to improve their efficiency and have better transport systems to supply their products pan-India. This will help them in being more competitive vis-à-vis their competitors in other states.”
Bhandare also thinks that Goa has to increase focus on industries, which don’t need that much land like information-technology (IT). In such industries, employment and revenue generated per square meter of land is much higher than traditional manufacturing companies.
Tourism stakeholders also think that the state government should take steps to provide avenues for entertainment and conferences for tourists, which will improve Goa’s image as a destination. So far, most tourists come to Goa for sun and sand only. But, in future, Goa’s brand will remain intact only if better facilities and products are offered to tourists. Otherwise, destinations like Sri Lanka, Vietnam and Thailand will gain at Goa’s expense.
In a nutshell, the recovery shown by Goan economy will be sustainable only if steps are taken for its long-term fix. The manufacturing sector with its expansions has shown some promise, but both tourism and mining are facing tough challenges. In the long run, the state will have to promote sectors like IT to diversify the economy.
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