The Union government is likely to rejig the goods and services tax (GST) rates. The panel of officers nominated by the GST council may recommend increasing the 5 percent tax slab to 8 percent and the 12 percent slab to 15 percent. Lalit Agarwal, chairman and managing director of V-Mart Retail, discussed his views on the GST rates and the state of the economy in an interview with CNBC-TV18.

“Majority of apparel that we deal with are below Rs 1,000 of product. So these are primary product on which the rate of GST is 5 percent. Almost 20 percent of the apparels are more than Rs 1,000, so the rate there would be around 12 percent right now. There are also certain items which are non-apparel, which are in the bracket of 18 percent,” he said.

Agarwal said that any GST hike will have an adverse impact on consumption as, furthering deepening the problem of declining consumption that has gripped the economy.

“Yes, it is going to be the worst news right now. As of now still we are struggling to cope up with the consumption and we are seeing that pain right now in the market. If at this point of time we hear this news of rate going up, it is going to be further derogatory. So it is not going to be a very inviting and welcoming news.”

On same-store-sales -growth (SSSG) guidance of 5-7 percent and revenue growth guidance of around 20 percent, Agarwal said: “We are going through a rough patch, the market is going through a rough patch. It is being seen that the consumption has not grown too much.

"We are as of now struggling to meet those numbers, there are going to be good signs coming up. We have opened up almost 45 new stores till now. We will generate the growth at the company level but on the like-to-like basis, it will be a difficult number to achieve.”

On the prospects of opening new stores, he said, “We are still bullish, we don’t want to reduce the number of stores. We want to get into this market right now. We believe in the long-term story. We believe that the model is a great model for India. This is going to grow and grow more. There is large opportunity, which is waiting for us and we are doing great. So we have done all the right things in the organisational level, at the backend level, at the supply chain level. So we want to keep doing what we are trying to do and wait for customers’ aspiration to grow consumption.”