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One year of GST: Impact on business in India

By:Vandita Jadeja 2018-06-27

It is almost a year since GST has been implemented in the country and a strong percentage of the chief financial officers of the country believe that it has had a positive impact on the business climate. According to a Deloitte survey, 77 percent of CFOs believe that GST has had a positive impact on the business in the country. About 57 percent of CFOs are willing to take bigger business risks as the next couple of years are expected to be a period of consolidation of gains from the recent reforms.

Porus Doctor, Partner in Deloitte India stated that the introduction of GST necessitated a relook at the current business models by the CFOs. It had far reaching implications on the business functions where the impact was on legal, finance, IT systems, taxation and supply chain. Moreover, GST’s value proposition has been appreciated by the CFOs. According to the survey, the impact of GST related better revenue and efficient supply chain and 58 percent CFOs also saw an improvement in the ease of doing business. The industry also witnessed a negative impact on the working capital and the finance cost post the implementation of GST.

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The survey also found that 53 percent CFOs believe that there will be increase in the headcount of the organization over the next one year. There will a reduction in manual intervention, but the increase in headcount will come from operations growth and the requirement for new skill sets as well as geographical expansion. About 83 percent CFOs seemed optimistic about the increase in revenue and only 45 percent were hopeful that there would be an increase in operating margins. This sentiment was driven by concerns over increasing costs with the advances in technology and improvements in productivity as well as regulatory requirements.

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With regard to the economic outlook, almost two third of the respondents were positive about the economic prospects in the coming period and about 94 percent were optimistic over the next two to three years. This survey showed the viewpoint of more than 250 CFOs in the country. The respondents included CFOs from both, listed and unlisted companies as well as Indian and multinational companies.

 

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