Winning Bizness Economic Desk

India’s June month’s Goods and Services Tax (GST) collection stood at Rs 1.74-lakh-crore, an around eight per cent growth over the same month of the previous year (June 2023).

The GST mop-up in the previous month of May this year stood at Rs 1.73-lakh-crore.

While June’s collection expanded eight per cent on a Year-on-Year (YoY) basis, it was flat Month-over-Month (MoM).

The collection in the first three-months stands at Rs 5.57-lakh-crore. Better compliance and consumption have improved the GST collections.

In a social media post, the country’s union finance ministry said that with reduced tax rates on household goods after implementation, seven-years of GST has brought “happiness and relief to every home” through lower GST on household appliances and mobile phones.

The compliance burden was reduced for small tax-payers, the finance ministry said, adding that the GST Council has recommended to waive off annual return filing requirement for tax-payers with an aggregate annual turnover of up to Rs 2-crore in FY 24.

The quarterly return filing and monthly payment of taxes (QRMP) scheme has reduced the number of returns filed in a year from 24 to eight for more than 44-lakh small tax-payers, it said.

Between April 2018-April 2024, GST Tax-Payer Base Increases to 1.46-crore

The Goods and Services Tax (GST) tax-payer base has increased from 1.05-crore in April 2018 to 1.46-crore in April of this year (2024).

“We have witnessed a quantum jump in tax-payer base along with improved compliance,” the Central Board of Indirect Taxes and Customs (CBIC) chairman, Mr Sanjay Kumar Agarwal, said.

The union finance ministry said that the GST regime has enhanced the ease of living, with every household saving on expenditure on food items and items of mass consumption after the implementation of the GST regime.

The rate of food items such as unpacked wheat, rice, curd and lassi which were taxed at 2.5 per cent-to-4 per cent before GST implementation was at nil, post the GST regime roll-out.

Household goods like cosmetics, wrist-watches, sanitary plasticware, doors and windows, furniture and mattresses are now taxed at a lower rate of 18 per cent under the GST regime, as compared to the 28 per cent in the erstwhile excise and VAT regime.

RBI Governor Cautions Against Tech-Led Disruption in Financial Systems

India’s apex bank, the Reserve Bank of India (RBI) is watchful of emerging risks, even as the Indian economy is exhibiting strength and resilience amid headwinds, its governor Mr Shaktikanta Das said.

He cautioned against disruptions in the financial system from new technologies.

According to the Reserve Bank governor, the matrix of financial stability was perhaps at its best, but now the real challenge was to maintain it and improve it further.

“New technologies offer gains in efficiency and customer experience, but they can also bring with them sudden and widespread disruptions to the financial system,” Mr Das said in the foreword of the June edition of the Financial Stability Report.

“This requires that all stakeholders not only invest adequately to take full advantage of technological advancements, but also take steps to safeguard the security and soundness of their systems,” Mr Das said.

The country’s banking regulator was watchful of the emerging risks including those from cyber hazards, climate change and global spill-overs, Mr Das said.

The financial system was stronger and more vibrant than what it was before the onset of the recent period of crises, the RBI governor said, adding that the country’s economic activity was expanding at a steady pace.

It was important to consolidate the gains and nurture a financial system that is future ready and supports the needs of India’s growing economy.

“Furthermore, as India’s contribution to global growth rises, our financial system must also modernise and deepen as it prepares to go more global,” Mr Das said.

“Efforts must be made to develop an eco-system that puts the interests of the customer at the forefront,” he said.

India’s Macro-Economic Fundamentals to Remain Strong in H2 FY 25: Nomura

Global brokerage house, Nomura, said that it expects the country’s macro-economic fundamentals to remain strong in the second-half of this fiscal (FY 25).

This will be because of steady growth, a low underlying inflation and contained fiscal and current account deficits.

The globally well-known brokerage firm also does not foresee a shift towards populist policies following the unexpectedly weak victory for Mr Narendra Modi, the country’s Prime Minister in the recently-concluded national elections.

It anticipates a continued focus on capital expenditure and fiscal consolidation in the upcoming July budget.

The brokerage house pointed to the Reserve Bank of India (RBI)’s substantial foreign exchange reserves that could help mitigate external spill-overs, promote stability and encourage capital inflows.

This overall stability, the firm said, is expected to help India compress its risk premium.

On inflation, Nomura stated that a decline was registered in India’s consumer price index from 5.7 per cent at end-FY 24 to 4.8 per cent in Q1 FY 25. The firm projected it to average below 4.5 per cent over the next three quarters.

Food inflation is expected to moderate going forward due to the anticipated transition from El Nino to La Nina after June, ample rice buffer stocks and lower pulses inflation driven by increased production.

A point to highlight here is that based on this, Nomura sees the country’s underlying inflation dynamics as a stand-out in the global context of sticky inflation.

India’s GDP Growth Likely To Be Close To 7.5 Per Cent In FY 25: NCAER

India’s economic growth is likely to be close to 7.5 per cent this fiscal (FY 25), the National Council of Applied Economic Research (NCAER) said.

The growth will be propelled by the buoyancy in economic activity witnessed in the first-quarter of this fiscal (Q1 FY 25), a strong policy focus on investment and the expectations of a normal monsoon.

Here, it must be pointed out that India’s apex bank, the Reserve Bank of India (RBI) had raised its projections for the country’s GDP growth to 7.2 per cent from 7 per cent for FY 25.

Another point that needs highlighting here is that several other agencies have also raised their growth projections for the country’s economy.

“GDP growth during 2024-25 may turn out to be higher than seven per cent and even closer to 7.5 per cent,” NCAER’s Director-General Ms Poonam Gupta said.

Growth in the Index of Industrial Production (IIP) for core industries accelerated in April of this year while GST collections also remained buoyant Year-on-Year (YoY).

Another important point to be noted here is that bank credit growth remained above 20 per cent despite some deceleration in personal credit growth and expectations of an `above normal’ monsoon despite deficient rainfall in June held out strongly for the farm sector, Ms Gupta said.

Retail inflation slid to a 12-month low of 4.7 per cent in May of this year. However, food inflation remained high, Ms Gupta said, adding that taming food prices remains a challenge.

According to her, with inflation seemingly having peaked, monetary policy was unlikely to be tightened any further. “If anything, it may be eased during the year,” she said.