Explained: Why recent GST revenue collection data indicates uptick in economic activity

The sustenance above Rs 1 lakh-crore indicates a pickup in economic activity after a series of localised lockdowns during the second wave of the Covid-19 pandemic.

Gross Goods and Services Tax (GST) revenue collections in August (for sales in July) came in lower than previous month’s level but crossed the Rs 1 lakh-crore mark for the second consecutive month.

The sustenance above Rs 1 lakh-crore indicates a pickup in economic activity after a series of localised lockdowns during the second wave of the Covid-19 pandemicOut of the total Rs 1.12 lakh crore collection, CGST is Rs 20,522 crore, SGST is Rs 26,605 crore, IGST is Rs 56,247 crore (including Rs 26,884 crore collected on import of goods) and cess is Rs 8,646 crore (including Rs 646 crore collected on import of goods).

What does it indicate?

The pickup in economic activity was visible in the improvement in e-way bills — which are mandatory for the inter-state transportation of goods valued over Rs 50,000 — in July. They have remained steady in August as well.

In July, e-way bill generation had picked up to 6.41 crore from 5.46 crore in June and 4 crore in May. The e-way bill generation has remained steady at 6.33 crore in August.

Daily average e-way bills stood at around 21.1 lakh, about 2 per cent higher than July.

GDP data the first quarter released on Tuesday recorded a record high growth rate of 20.1 per cent mainly due to a low base effect. This has happened despite a brutal second wave of the pandemic which peaked in April-May.

Data related to certain high frequency indicators, such as power generation, fuel consumption and railway freight for April-May, also indicates that rebound has been faster after Covid 2.0 than the first wave.

The GST collection, after posting above Rs 1 lakh-crore mark for nine months in a row, had dropped below Rs 1 lakh crore in June due to the second wave of Covid-19 pandemic.

“With the easing out of COVID restrictions, GST collection for July and August 2021 have again crossed Rs 1 lakh crore, which clearly indicates that the economy is recovering at a fast pace. Coupled with economic growth, anti-evasion activities, especially action against fake billers have also been contributing to the enhanced GST collections. The robust GST revenues are likely to continue in the coming months too,” the Finance Ministry said.

source:https://indianexpress.com/article/explained/explained-gst-revenue-collection-economic-activity-covid-7482385/

Leave a Reply

Your email address will not be published. Required fields are marked *