GST reforms to set the next investment cycle, offer in the coming neighborhoods and years: Sanjiv Bajaj: Sanjiv Bajaj

Sanjiv Bajaj, chairman and director of Bajaj Finnier, that the government of the government in 2017 mentions the greatest reform of the goods and service tax (GST), said that the radical GST rate rate reductions of the government will provide a powerful boost for demand, loans and financial services. He believes that the relocation will strengthen consumption in both urban and rural markets, while small companies, MSMEs and financial institutions are supported.

“This is probably the biggest reform since the start of GST. I see this as a very important headwind that should help stimulate growth in the coming quarters and years,” Bajaj now said in an exclusive interaction. He added that reform would not only benefit from consumers, but also companies in housing, construction, insurance, infrastructure and financial services.

Revival of consumer demand

In the past year, the question of urban consumers had shown signs of fatigue, with expenditure on Big-ticket articles that delay. Bajaj noted that the delay was partly due to external uncertainty, in particular around the tensions of global trade, and also due to stricter rules for unclocked lending. “In the last quarter we started to see some improvement. Now, with this GST reduction, the trust and the disposable income will get a big boost,” he said.

With the festive season, Bajaj is approaching the demand for sustainable consumers – such as mobile phones, air conditioners, televisions and washing machines – to return strongly. He also provides for an increase in the sale of two -wheelers, which have been slow for several months, as well as in entry wagons. “The timing of this reform is ideal. It will help not only buy to Festief, but also shape the stage for sustainable demand in the coming months,” he explained.

Large implications for insurance

One of the most impactful changes is the GST exemption for health and term insurance products. Bajaj believes that this could considerably expand the insurance coverage in India. “There will be a direct price reduction, making health and life insurance more affordable. This puts money back in the hands of the consumer and should help expand the penetration of the insurance institution,” he said.

He also insisted on the benefits of GST cuts on inputs to patients at hospitals, so that the ecosystem as a whole contributes to affordability. Bajaj added that insurance companies now have the responsibility to pass on tax savings to customers through price adjustments. “It is not just about maximizing profit per policy. India is a huge market. The more we expand, the more financially inclusive we become,” he emphasized.

Support for MSMEs and Housing

Bajaj pointed out that MSMEs, many of whom work with tight cash flows, would benefit from lower GST with important inputs, which would boost their trust and profitability. With rising turnover during the festive period, he expects that many MSME’s capacity limits are approaching and ultimately increasing investments. “This could finally activate the next investment cycle, who waited for the right demand trigger,” he said.

The GST Cut also has consequences for housing and infrastructure. With lower costs in building materials, Bajaj expects an increase in the demand for home financing and MSME Loans, who will benefit lenders such as Bajaj Finance and Bajaj Housing Finance.

Give risks under control

Bajaj recognized concern about standard values ​​in the MSME credit space, but emphasized that the standard rates of Bajaj Finance remain far below the industrial average. “We have marked this risk earlier, but our default values ​​are still about half of the industrial levels. With GST that puts more money in the hands of SMEs and MSMEs, the default values ​​have to reduce logically. But we have to wait a few quarters to see the full impact,” he said.

He added that uncovered lending, which was a great concern for the Reserve Bank of India (RBI) in the last two years, now back to before the known levels after sharpening the regulations.

Switch to strengthening the financial ecosystem

In addition to an immediate consumption profit, Bajaj sees the reform as a step towards expanding the formal financial system of India. By streamlining registration and reducing reverse service structures, more companies and private individuals are expected to join the GST network, improve compliance and broaden the tax basis.

“This reform offers more horsepower, not only for the short term, but also for the coming years. It is not only about cuts, but also about strengthening the financial ecosystem,” said Bajaj.

For Sanjiv Bajaj, the GST rate reduction is more than a fiscal tweak – it is a structural reform that increases consumer confidence, extends insurance coverage, supports MSMEs and forms the scene for the next investment cycle in India.

(Disclaimer: recommendations, suggestions, views and opinions of the experts are their own. These do not represent the views of economic times)