Sivakasi in Tamil Nadu, known as the country's firework capital, was hit by the increase in the GST on firecrackers that was put in the highest tax slab of 28 per cent. Before this, traders had to pay a tax of 14.5 per cent on firecrackers. The indefinite strikes by fireworks manufacturing units in the state against the 28 per cent GST on fireworks failed to bring them relief.
At a crackers market in Chennai, Siva Kumar claims to have a huge stock of crackers that remains unsold. He said that of the Rs 8 lakh that he had invested, he had recovered just Rs 5 lakh so far. "No expectation of any profit now. It's enough if our investment comes back. We are not letting any customer go," he said.
Raja, a corporate professional, who came to the market with his children, said he cut down on the cracker budget this year. He blamed the cash crunch and the steep 28 per cent GST on firecrackers along with the effects of demonetisation.
"This year I purchased crackers only for Rs 6,000. Last year I spent Rs 10,000" he said. He added that due to GST "for every Rs 100, nearly 30 goes as tax. Who would want to spend then?"
Along with the drop in sale of firecrackers, textile showrooms too said they witnessed a 30 per cent drop in sales. A five per cent GST was imposed on fabrics and the government had ruled out lowering the GST rate for the textile sector.
Aby and her mother from the United States who were shopping at Chennai's T Nagar, the go to destination for shoppers, said that the tight cash flow had dampened the spirit of the festival.
"It is a downgraded Deepavali this time. GST has increased price of small things like ghee and rice," Aby's mother, Uma Sundaram said.
While Deepavali was a costly affair for consumers, the business community too faced the brunt. Their hope of recovering losses or breaking even ahead of Deepavali, seemed to be short lived.