AAt about ₹1.5 lakh crore, the Goods and Services Tax (GST) inflow in December 2022 indicates a recovery of sorts from November, when revenue fell to a three-month low. November 2022 revenue was up 10.9% from a year ago, but still posted the slowest growth since June 2021. December’s revenue was 2.5% higher than November’s and reflects year-over-year growth of 15.2%. While the ₹1,49,507 crore GST kitty in December is the third highest since the introduction of the indirect tax regime in July 2017, it may be more notable than the previous record. First, since these taxes are linked to economic activity carried out in November, they indicate that factories and service providers were busier than in October, much less affected by post-festive consumer fatigue. Second, on two other occasions when GST revenue was higher – ₹1.67 lakh crore in April 2022 and around ₹1.52 lakh crore in October – the numbers were inflated by taxpayers’ financial year-end reconciliation and pre-festive spending or stocking up, respectively. This was not the case in December. Arguments that higher inflation drove these numbers are only partially tenable – headline inflation eased to an 11-month low of 5.9% in November, services inflation was flat sequentially, and goods inflation was 6.2%, Which is high but very less as compared to previous months. Therefore, if inflation drove up revenue, it did not play a greater role in December than it did in earlier months when price increases were higher.
From what is known so far, the eight core sectors registered a growth of 5.4% in November, up from only 0.9% in October, when industrial production fell by an alarming 4%. While the industrial production level for November will be known only later this month, the GST revenue indicates that demand for both goods and services has picked up. As the mandarin of North Block enters the final leg of curating the Union Budget, the latest GST print should provide some hope while working out the fiscal glide path and revenue aspirations for the coming year. Not only have GST collections been over ₹1.4 lakh crore for 10 straight months, December’s good inflow has pushed up the average monthly consumption to ₹1.49 lakh crore for 2022-23. But there is little room for complacency – any slowdown in economic activity due to global headwinds could drag down revenues as well. The GST Council, which met briefly last month after a long hiatus but left crucial reforms hanging, should be convened soon after the budget – not only to help sustain revenue flows, but There is also a target to rake in more than a rational rate structure that brings all currently excluded items under the ambit of one nation, one tax.
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