Record India GST Collection an Exception Rather Than the Rule
(Bloomberg) -- India's goods and services tax revenue touched the highest ever in April, but the spurt in collections is far from becoming the norm just yet.
Collections from the nationwide sales tax rose 10 percent to 1.13 trillion rupees ($16 billion) in April from a year ago, official data show. While that was the closest to the 1.15 trillion rupees monthly target set by Prime Minister Narendra Modi's administration, it's still not enough to bridge the government's budget gap, say economists.
“If GST collections do not improve further and sustain, the pressure on the central government's fiscal position will continue,” economists Suvodeep Rakshit and Upasna Bhardwaj at Kotak Mahindra Bank wrote in a note. The targeted growth of 24 percent in the financial year ending March 31 will “be difficult to achieve.”
India let fiscal deficit widen for a second straight year as Modi, who's seeking a second term in office in elections currently underway, tried to win over voters through cash handouts for farmers and tax cuts for the middle class.
The government needs to more stringently implement programs to discourage tax evasion and boost compliance of direct and indirect taxes to alleviate the fiscal stress, said Ashray Ohri, an economist with ICICI Bank Ltd.
The government had touted GST as a tool to increase tax compliance when it was introduced in July 2017. Collections under the new tax have crossed the 1 trillion rupee-mark in three of the first four months in 2019, suggesting it's gaining traction.
The jump in collections was “expected to happen after transition period of adjustment is over,” said Arvind Virmani, a former chief economic adviser in the finance ministry and chairman of the Foundation For Economic Growth & Welfare. “One data point doesn't, however, make a new trend.”
To contact the reporter on this story: Vrishti Beniwal in New Delhi at vbeniwal1@bloomberg.net
To contact the editors responsible for this story: Nasreen Seria at nseria@bloomberg.net, Karthikeyan Sundaram, Ashutosh Joshi
©2019 Bloomberg L.P.
-
Talking Points This Week: Tech Nerves, FII Buying, And A Faraway Banking Shock
The global markets are not shining this Diwali. The exception in the large markets is, India.
-
Midterm Rally Lasted A Day. The Hard Reality Of A Divided US May Last Two Years | Opinion
Between a contested AI boom, a debt ceiling that arrives in 2027 and a president with every incentive to act alone, the next two years may prove more volatile than the first day's rally suggests.
-
Blue Wave Will Derail the AI Trade but Won't Dismantle the AI Era | Unhedged Position
The Democrats' sweep of the US Congress will see politics collide with economic forces both over the long and short term.
-
It's Time To Take The GST Council's Bet On Trust Global
Payment records can prove India's services exports, and clear, proportionate rules can bring foreign digital sellers into the tax net.
-
Opinion | India at 38: From Innovation Overperformer to Innovation Powerhouse
India now has 453 VC-backed deep science startups, 18 of them late-stage, after 117 percent growth since 2020. Laurus Labs, at USD 9.3 billion, is the most valuable deep science company in any middle-income economy outside China.
-
Navigating Energy Crossroads: S Jaishankar's Call For Diversified Supply Chains At G20 Ministerial Meeting
As geopolitical fault lines continue to test maritime trade routes and commodity flows, Jaishankar's message remains pertinent: true economic resilience requires open markets, protected transit lines, and a genuine commitment to multilateral cooperation rather than coercion.
-
Indians Are Travelling, But Not Every Journey Is A Holiday | The Week In Whys
Pilgrims, patients and working women are the real travellers, and the system hasn't quite caught up with them.
-
Getting To Work Costs Women More | The Reason Why
It is not just about women paying more than men. It is about women paying much more in cities than in villages.
-
AI Bias In Investing Cannot Be Eliminated, But It Can Be Governed
Framing is a particularly important example as identical financial information presented in terms of gains rather than losses can lead an LLM to reach a different assessment.
