Sudden pick-up in e-way bills after May dip signals recovery, says govt
Gross goods and services tax (GST) collections, after remaining above the Rs 1-lakh-crore mark for eight months in a row, came in at Rs 92,849 crore in June (May transactions), reflecting the blow to the economy from a virtually pan-India lockdown.
The government, however, said thanks to reduction in Covid-19 case numbers and easing of the lockdowns, e-way bills generation by businesses rose to 5.5 crore in June, from 3.99 crore in May, indicating a smart recovery of trade and business. About 5.9 crore e-way bills were generated in April.
Gross receipts had come in at `1.03 lakh crore in May, markedly lower than the record Rs 1.41 lakh crore mopped up in the previous month.
Other high-frequency indicators available for June point at a mixed bag. While both manufacturing and services PMI shrank the most in 11 months in June, exports jumped 47% from a year before and 30% from the pre-pandemic (same month in 2019) level. With the impact of the second Covid wave waning and vaccination drive making progress, some parts of the economy may start looking up from July. However, no substantial recovery is seen before September when manufacturers typically start to stock up to cater for festive demand, thus boosting economic output.
In recent months, the government’s GST revenue has been robust, thanks to steps taken to curb evasion, increased compliance and also a shift of business away from the informal sector. A nascent economic recovery that appears to have been quickly disrupted by the pandemic’s second surge, also helped.
For the second year in a row, the Centre will borrow under a special, relatively low-cost mechanism in 2021-22 to bridge a yawning shortfall in the GST compensation cess pool and transfer the funds to states as back-to-back loans, sans any big fiscal cost to states.
While the amount borrowed under the RBI-enabled mechanism last year was Rs 1.1 lakh crore — there was still a shortfall, Rs 60,000-70,000 crore against the 14% annual revenue growth guaranteed to states — the idea is to borrow some Rs 1.58 lakh crore in 2021-22.
The GST mop-up of June 2021 was still 2% higher than that in the same month last year, which belonged to transactions in May 2020, which saw tapering off of complete nationwide lockdown.
Of the June mop-up, Central GST was Rs 16,424 crore, state GST Rs 20,397 crore and I-GST Rs 49,079 crore (including Rs 25,762 crore collected on import of goods) and cess proceeds of Rs 6,949 crore (including Rs 809 crore collected on import of goods).
“The daily average generation of e-way bill for the first two weeks of April 2021 was 20 lakh, which came down to 16 lakh in last week of April 2021 and further to 12 lakh in the two weeks between May 9 to 22. Thereafter, the average generation of e-way bills has been increasing and has reached again to 20 lakh level since the week beginning June 20. Therefore, it is expected that while the GST revenues have dipped during the month of June, the revenues will see an increase again July 2021 onwards,” the finance ministry said in a statement.
The ministry said GST collections reported for June included collection from domestic transactions between June 5 to July 5 since taxpayers with turnover up to `5 crore were given various relief measures in the form of waiver/reduction in interest on delayed return filing for 15 days for the return filing month June, in the wake of the second wave of the Covid pandemic.