Growth signals: On GST revenues

The indirect tax intake might be a bonanza despite some momentum loss

The Goods and Services Tax (GST) has yielded (to supply or produce something positive such as a profit, an amount of food or information) close to ₹1.65 lakh crore in gross revenues (the income that a business or government receives regularly, or an amount representing such income) in the last month of 2023. As the Finance Ministry has highlighted, this is the seventh occasion in this fiscal (relating to public money or other financial matters) year that GST revenues were over ₹1.6 lakh crore. The first nine months of 2023-24 have clocked (to take a particular time exactly to do or complete something) a 12% rise in GST collections, with the monthly intake averaging ₹1.66 lakh crore, from ₹1.49 lakh crore in 2022-23. There is a good chance that the tax, which North Block mandarins (a person who has a very important job in the government, and who is sometimes considered to be too powerful) have often lamented has not delivered as much revenue as was anticipated (to imagine or expect that something will happen) at the time of its launch, may end up bestowing (to give something as an honour or present) a bonanza (a situation in which something good exists in large quantities) to the exchequer (the government department that is responsible for the country’s finances, including tax levels and how much money the government can spend) this year. The Budget had factored in monthly GST revenues of around ₹1.59 lakh crore, so maintaining the current rate should translate into an additional inflow of ₹80,000-odd crore. While this may provide some buffer (something or someone that helps protect from harm) for any fresh pre-poll handouts (a document given to students or reporters that contains information about a particular subject) from the Centre ahead of the general election, an expected slowdown in the final quarter of the year may moderate (neither small nor large in size, amount, degree, or strength) the gains. The Reserve Bank of India’s projection was for growth to taper off from 7.7% in the first half of the year to 6.5% in the October to December 2023 quarter and further to 6% in the current quarter. December’s GST collections for transactions (an occasion when someone buys or sells something) undertaken in November indicate some moderation in momentum already.

Both the headline number and the growth rate for December were the lowest in three months. In fact, the 10.3% growth was far weaker than the 15.1% recorded a month earlier, and just marginally (very small amount) better than September’s 10.2% uptick, which in turn marked a 27-month low. Deepavali, which was closer to the middle of that month, should have spurred (to encourage an activity or development or make it happen faster) some last minute spending boost, but that effect seems to have been insipid. Revenues from domestic transactions grew 13% in December, down from the 14-month high growth of 20% in November, suggesting that the initially healthy festive fervour (strong and sincere beliefs) may have partly hit the ‘snooze’ button. This is corroborated (to add information in support of an idea, opinion, or statement) somewhat by e-way bills generated in November which slid to 87 million from 100 million in October. The government has emphasised resilient (able to be happy, successful, etc. again after something difficult or bad has happened) domestic consumption (an amount of something that is used, or the process of using something) steered the economy despite global headwinds (challenges that hinder growth or progress). Indicators such as car sales, which crossed the four-million mark in 2023, led by high-end sport utility vehicles, can buttress (to make support for an idea or argument stronger by providing a good reason for it) that belief. But with rural demand likely to be fragile amid bleak (little or No hope for the future) prospects for the farm sector, and the festive push already in the past, policymakers, for whom this is the last month of official data to base their Interim (temporary; intended for a short period only) Budget premises on, must note the slowing pace while factoring in the additional inflow that seems set to exceed expectations.

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