PANAJI: A combination of ban on mining activities in the state and the economic slowdown has affected the state’s consumer spending and this would be a worrying factor for the Chief Minister, Mr Manohar Parrikar while making his calculations before presenting the state Budget for 2013. Apparently, consumer spen-ding, which accounts for a major percentage of the Gross Domestic Product (GDP) factor, is at its lowest in Goa due to the global slowdown, ban on mining in the state and the inability of the Centre to curb the growing inflation.
“Nearly Rs 500 crore spending from the consumers’ pockets has come down in Goa and that has had its impact on the commercial tax collection,” said Mr Parrikar on the sidelines of the pre-budget interaction with the public on Thursday. He said that consumers have curtailed purchase of electronic goods by nearly 30 per cent and as the spending is at its lowest, it is having the multiplier effect.
The Chief Minister said that the direct loss due to a ban on mining activities in the state is Rs 900 crore. He further said that the indirect loss, however, amounts to nearly another Rs 400 crore. Giving an example of the indirect loss incurred, he said that about Rs 5 crore is the loss incurred on the sale of diesel per month due to the ban on mining.
If the national aspect is taken into consideration, the latest Index of Industrial Production (IIP) for December 2012, released on February 11, 2013, confirms the worst for consumer durables like TV sets, refrigerators and cars which have declined by 8.2 per cent across the country. In the non-durable segment, production in the food and textile industries has declined by 1.4 per cent. The household consumption expenditure contributes to over 50 per cent in the national GDP and a similar portion in the state’s GDP.
The Goa Chamber of Commerce and Industry (GCCI) president, Mr Manguirish Pai Raikar said that it is obvious that Goa, which was among the best performing states with double digit growth, would certainly come down to single digit as major components of the GDP - consumer spending, investment and exports have been recorded at the lowest. “People need to have money to spend and there is no money rolling in the market with the economic slowdown and mining ban,” said Mr Raikar.
“During the previous year’s Diwali festival, we had recorded nearly Rs 1 crore sales, while during last Diwali sales were reduced to Rs 60 lakh. That indicates a nearly 40 per cent reduction in consumer spending, that too during the festive season,” said Mr Akshay Shankwalkar of Sony showroom in Panaji.
It is not only the electronic or fast moving goods that have been hit, but the entertainment industry too has felt the pinch of low consumer spending. “Though there is no reduction in the sale of tickets, movie lovers are, however, reluctant to spend on the eatables available in the multiplex in the recent past and the sale of these eatables has come down,” said the general manager of Inox multiplex theatre complex in Panaji.
A major retail store in Goa, Vishal Mega Mart claimed that there is no fall in the sale of consumer goods. It, however, claimed that there is no substantial growth in the sales either.
It will be a big challenge for Mr Parikar to resurrect the consumer confidence, especially when the Union government has failed to curb the high inflation and with the global economic slowdown having reflected on foreign tourists’ inflow, and also a ban on mining in the state. But his ability to plug the revenue leakages in the last one year and his optimism on resource utilization could prove to be a silver lining when he presents the budget on Monday.