Critically examine the potential implications for small sector business and consumers.

Published: February 6, 2016

Hint:
The GST is unlikely to benefit the unorganized sector because it would not get any tax credit for purchases that it makes from organized sector. Further, if a business from unorganized sector sells the goods to unorganized sector, it would not be able to pass on the benefits of setoff. The biggest beneficiaries will be sectors with a high percentage of the market occupied by unorganized participants, as the latter are forced into the tax net and the competitive positioning of organized companies improves. Due to this, it can be expected that unorganized sector might become less competitive and may face decline. Any such decline might further aggravate the unemployment in the country.

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