Friday, 26 August 2016

Market Instability Due to Brexit and GST

In the last few months we have seen two very important economic events occur, one a global event which is Britain’s exit from the European Union and Another a national event which aims to make the Indian economy an attractive place for investment which is the approval of GST (Goods and Services Tax) by the parliament which makes the indirect tax system a much more transparent procedure. Apart from the two large events the spark of Raguram Rajan’s exit from the RBI is not seen as a relief during this time of global instability.

         The Rupee has seemed to weaken a bit and had fallen against the dollar to 67.97 but seemed to stabilize again. Though there is no direct threat of the rupee against the fall of Brexit, it can be seen that a global crisis will affect it indirectly from economies like USA and Russia from which India has direct relations. It will also affect the inflow of foreign investment at least for a while and hamper the growth of policies like make in India. Though the market sentiment holds that the Brexit in the long term is good for India and the market can use it to an advantage for better access to both the UK and EU.

GST will definitely see a positive impact in the manufacturing sector and especially in the transport and logistics sector can see an improvement. It will also aim to bring together the various states and also make for easy compliance and reduce the cascading tax on tax problem faced. It will also make the Indian goods available at competitive prices in other foreign market. It will also boost India’s GDP and assist in the collection of tax thus also increasing the revenue for the government.

Thus my overall view is that even though there is a lot of market instability, it seems as an opportune moment for India to make use of the available advances and gain revenue overall.
                              Thank you all  


                                                                     - Pranay Kothari.N

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