Even as the overall Goods and Services Tax (GST) collections surpassed Rs 1.6 lakh crore in most months of the fiscal year, a recent study has brought attention to the uneven growth in consumption demand among Indian states. The findings suggest that several states are lagging in GST collections, indicating disparities in economic activity and consumption patterns across regions.
The report highlights that despite a buoyant overall GST mop-up, the growth in consumption has not been uniform throughout the country. This could be a contributing factor to the overall consumption not surging at a higher pace, despite indications of pent-up demand in various sectors.
Key Observations
- Regional Disparities: The study suggests that states like Gujarat and West Bengal are yet to pick up the pace in terms of GST collections, and improvements in these states could significantly boost both consumption and tax collections. This regional disparity is seen as a potential explanation for the overall sluggish growth in consumption.
- Underperforming States: States such as Odisha, Rajasthan, and Chhattisgarh have registered growth rates of less than 11%, potentially impacting the rural side due to underwhelming performance in agriculture. The report speculates that as consumption evens out in these states, there is optimism for higher collections in the coming months.
- National Average Growth: While overall GST collections grew by 11.7% during the first nine months of the fiscal year, final consumption grew by 8.7% in the first half. State GST collections saw a robust growth of 15.2% to Rs 3.46 lakh crore between April and December 2023.
- Top Performers: Maharashtra, Karnataka, Tamil Nadu, Uttar Pradesh, Haryana, Telangana, Madhya Pradesh, and Uttarakhand emerged as the top-performing states with growth rates higher than the national average.
- Laggards: Gujarat, West Bengal, Delhi, and Odisha featured among the top 10 largest contributors with slower growth rates, indicative of consumption disparities across geographies.
- Smaller States: Relatively smaller states and Union Territories (UTs) showcased impressive growth rates, but their contribution to total collections remains limited at 3.2%.
The study concludes that understanding and addressing these regional consumption variations are crucial for fostering a more balanced and robust economic growth trajectory across the country. As larger states improve their GST collections and consumption evens out in slower-growing states, there is optimism for a more uniform and accelerated economic recovery in the upcoming months.
CAclubindia
