Millennial mindset, cabs hurting auto sales: Sitharaman

Congress reacts, questions if the decline in bus & truck sales is also because millennials have stopped buying them

Finance Minister Nirmala Sitharaman on Tuesday said the automobile industry, which is witnessing one of its worst slumps, had been impacted more by a shift to BS-VI norms and the mindsets of millennials, who now prefer to ride Ola or Uber rather than buying a car.

Her comments invited a sharp retort from the Congress, which tweeted, “So the decline in bus and truck sales is also because millennials have stopped buying them as much as they used to. Isn’t that right FM Smt. @nsitharaman?”

Addressing the media in Chennai on 100 days of the Modi government, the finance minister said the auto sector had its “good times till about two years ago”.

The minister, however, said that the government was conscious of the need to respond to the slowdown in the auto sector and was taking measures through other routes than the GST.

Sitharaman said the government has decided to front-load spending from the Rs 100 lakh crore Budget-proposed infrastructure fund to boost consumption.

Though she spoke on a host of political, social and other achievements of the government, most of the questions to the minister related to auto sector slowdown and the economic downturn.

Auto sector at present attracts a peak GST rate of 28% with additional cess ranging from 1% to 22% depending on the length, engine size and type of the vehicle.

While the states are demanding that the Centre reduce the cess on them and bring the total tax incidence to 28% across the segments, the Centre is wary of losing a chunk of revenue if it forgoes cess.

Certain states like Kerala and Tamil Nadu are vehemently opposing any GST rate cut on automobiles.

A meeting of GST Council in Goa on September 20 is expected to discuss the auto sector woes amid problems of falling GST revenues month after month.

At a little above Rs 98,000 crore, the GST collection has grown only 4.5% year-on-year in the month of August. This is the slowest pace of GST revenue growth in any given month.

To a question on the dip in economic growth to 5% in the April-June quarter, she said, “Such dips in GDP growth do happen.”