Maharashtra has largest share in India’s export and GST base: Economic Survey

Maharashtra’s status as one of the largest states in terms of its economic size and prosperity gives it the largest share in India’s exports and the goods and service tax (GST) base, showed the Economic Survey 2017-18 released on January 29.

According to the survey, authored by Chief Economic Adviser Arvind Subramanian, there were 9.8 million unique GST registrants in the system as of December 2017.

It also estimates the current GST base at Rs 65-70 lakh crore. Tax base here refers to the aggregate value of the financial streams on which GST can be imposed.

The survey found Maharashtra had the largest share of the tax base at 16 per cent (see chart). Each state’s share in the GST tax base is almost perfectly correlated with the state’s share in the overall gross share domestic product (GSDP). Hence, the survey said, the biggest tax bases still seemed to be in the biggest producing states.

To be sure, as big industrial states, the share of Maharashtra and Gujarat in manufacturing GSDP is higher. Maharashtra’s manufacturing GSDP is 19.3 per cent of the overall GSDP and Gujarat’s is 13. 8 per cent.

Here, the survey had to say this: “It is true that the share of Maharashtra’s and Gujarat’s tax base under the GST is lower than their share of manufacturing. But because these two states also have a significant presence in services, their tax base share remains in line with their share of GSDP. Overall, the data seem to suggest fairness and balance in the GST outcomes.”

Another takeaway from the survey is state’s share of India’s exports.

Maharashtra had a share of 22.3 per cent, followed by Gujarat (17.2 per cent), Karnataka (12.7 per cent), Tamil Nadu (11.5 per cent) and Telangana (6.4 per cent). Together, these states account for 70 per cent of India’s exports.

Incidentally, these are also among India’s most prosperous states with high GSDP per capita.“A state’s GSDP per capita is highly correlated with its export share in GSDP. The one major outlier in the chart is Kerala, but only because it is a large recipient of remittances,” said the survey.


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