Kalpesh Tripathi
New Delhi: Suggesting that the four sets of booster dose have failed to reverse economic slowdown so far, the goods and services tax (GST) collection slipped 2.67 per cent to 19-month low of Rs 91,916 crore in September on a year-on-year basis.
The collection is much below the government expectations of Rs 1,10,000 crore on an average threatening to put pressure on fiscal deficit. The lower revenue mop-up could also impact government spending, the only engine of growth firing now.
The government has pinned hope on festive season demand starting this month for higher GST collection but early signs of revival are yet to be spotted.
As government is set to take Rs 1.45 lakh crore hit on its finances on account of recent reduction in corporate tax and other fiscal measures this year, decline in GST collection is being considered as a major concern.
With GST being a direct reflection of consumption demand, lower tax collection means reduced business activities.
Besides a plethora of initiatives taken by the government, the RBI too has cut lending rate to promote growth and investment but the impact so far seems limited. Economists are hoping that the central bank would further cut the lending rate by 25 basis points to spur growth.
Experts are of the view that when existing production capacity is utilised only to the extent of 70-75 per cent no business house would go for expansion. In what points to a crisis, most auto companies have seen their sales sharply declining month after month with no sign of a recovery. Volume of FMCG companies has also remained either stagnant or marginally better.
Seeking to arrest slowdown trends, the government has announced various measures in the last 45 days and may take more steps as key macro indicators continue to be in red.
In a fresh concern for the economy, the growth of eight core industries turned negative in August. The government data showed index of eight core infrastructure industries declined 0.5 per cent in this period.
Output of coal, crude oil, natural gas, cement, and electricity shrank in August while production of refinery products, fertilizers, and steel increased.
The negative growth in August indicated that a modest increase in index of industrial production (IIP) in July was merely a blip and recovery was still some time away.
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