[Editorial Analysis] An uneven uptick

Mains Paper 3: Economy
Prelims level: GST
Mains level: GST revenue trends indicate the recovery is neither smooth nor fast


• With gross revenues of ₹1.12-lakh crore in August, the GST has now yielded over ₹1-lakh crore a month for almost a full year.

• There came a blip in the when GST fell below ₹93,000 crore that compelled mobility restrictions across States.

• Those curbs have been progressively easing up — just as they were a year ago when the country saw a phased unlocking from the national lockdown. Compared to those lows, the August collections are 30% higher and also 14% above the pre-pandemic levels of 2019-20, though one must remember India’s growth had stuttered sharply that year.

• The GST collected in August pertains largely to economic activity in July and the mobility restrictions in most States had been eased further that month compared to June, including in the southern States.

• While revenues from domestic transactions were up 27%, key industrial States saw faster growth, including Karnataka, Tamil Nadu and Maharashtra.

• Going forward, the Government expects such ‘robust’ GST revenues to persist. Most economists agree that may be the case, unless the fears of a third wave come true, triggering lockdowns.

Problems with the recovery:

• Lower sequential collection: GST e-way bills generated in July surged to an average of 2.1 million from 1.8 million in June. Yet, on a sequential basis, GST revenues in August are almost 4% lower than the ₹1.16-lakh crore collected in July.

• Stagnation despite more taxpayers: higher compliance levels; At the start of the GST regime four years ago, it had 6.6 million taxpayers. On GST Day this July, the Finance Minister said this had risen to 12.8 million. But how many of them are filing returns each month is no longer known since the Government stopped disclosing that number from February 2021. This makes it virtually impossible to distil the effects of compliance and growth on GST revenues.

• Data Disclosure: The current data shows many such paradoxes. The Government would do well to restore and enhance its quality of data disclosures — even State-wise revenues have been selectively shared recently.


• As the Reserve Bank of India Governor has highlighted, the economy is still delicately poised — manufacturing recovery has stumbled in August, services remain stressed, exports stay strong but have slipped on a month-on-month basis just like GST collections.

• This recovery appears choppy rather than ‘fast’.


Prelims Questions:

Q.1) With reference to the Public Sector Bank (PSB) Reforms Agenda ‘EASE 4.0’ for 2021-22, consider the following statements:

1. Credit@click was a flagship initiative under EASE 3.0. and nearly 4.4 lakh customers have been benefitted through such instantaneous and simplified credit access.

2. EASE 4.0 aims to further the agenda of customer-centric digital transformation and deeply embed digital and data into PSBs’ ways of working.

Which of the statements given above is/are correct?
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2

Answer: C

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