Modi’s tax reforms have dealt a body blow to India’s vital informal economy
New Delhi/Mumbai — On the edge of one of India’s biggest slums, Alauddin Ansari opens a paper ledger of daily sales at his small leather shop and points to a blank page. That’s the tally for today. Nothing. Before Prime Minister Narendra Modi introduced the country’s new goods and services tax (GST) on July 1, Ansari said he was earning 6,000 rupees ($93) a day selling leather jackets, wallets, bags and belts. But India’s new tax classified leather products luxury items and raised the rate to 28% — more than double the 13.5% tax levied until June 30. Since then, his business has collapsed. "My business is down nearly 75%," Ansari said, turning a page to show he made just 850 rupees the previous day at his shop near Mumbai’s vast Dharavi slum. "Obviously, the GST has had an impact on trade. At 28%, GST is a bit too much." The leather sector is just one example of how India’s vast informal economy — which accounts for more than 90% of the workforce — is struggling under India’s new ta...
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