May 31, 2023

November GST Collection Up, But Revival Signs Are Not Clear

By Sunil Garodia
First publised on 2020-12-02 08:19:17

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Editor-in-Chief of indiacommentary.com. Current Affairs analyst and political commentator.

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The GST collections for November were Rs 1.05 lakh crore. This was 1.4% higher than what was collected in the same month in 2019. But these figures do not necessarily that the economy is recovering. That is for the simple reason that most of the increased demand for goods and services in both October and November was due to festival related buying. The actual effect of the economic packages and the unlocking will be known only when the GST figures for December come in January. Already, fears of a fresh wave of Covid infections have slowed demand in many sectors. This was proved when manufacturing hit a three-month low in November as orders were not forthcoming. The Purchase Manager' Index was 56.3 in November (October 58.9).

An indication that the demand revival might not sustain was apparent in the GST data for November. 6.4 crore e-way bills were generated in October. The figure dropped down to just 5.5 crore in November. This shows that the movement of goods from manufacturing or sales hubs to selling points was down, indicating lower demand. One heartening feature of the figures in November is increased compliance. If this continues, GST collection will keep on improving further as many transactions that were escaping the GST net will now be captured due to the increased and better use of technology and ease of filing.

A disturbing aspect in the November data was the below par performance of some of the usually top grossing states. GST collections declined in Maharashtra, UP, Delhi, Karnataka and Telangana. The reason for this is not immediately known. If these states had performed like in past, the collections would have been higher in November. In order to give a further push to the economy, the government needs to start making big investments in the infrastructure sector to revive demand for the core sector, which in turn would set the wheel rolling for the other sectors due to chain reaction.