IN a sign that the Covid-scarred Indian economy is limping back to normalcy, GST collections have crossed the Rs 1 lakh crore mark for the first time in the current financial year. The gross GST revenue collected in October was Rs 1,05,155 crore, 10 per cent higher than the figure for the same month last year. It shows that the ongoing festive season is witnessing a surge in demand, a trend that is expected to continue throughout this month as well. The uncertainty caused by the pandemic — and the lockdown — forced many people to prefer saving to spending as far as possible, but with the virus ebbing for the time being, penny-pinching seems to have decreased. Sustaining the rise in consumption would be a challenge, considering that there is a likelihood of a second wave of the pandemic later this year. If the Covid caseload stays under control with a high rate of recoveries, Central and state governments should set in motion a comprehensive plan for a faster pace of economic recovery.
It’s noteworthy that despite the dip in revenue in previous months of this fiscal, the government has issued Rs 1.27 lakh crore worth of income tax refunds and Rs 70,000-crore GST refunds so far. Under the Rs 73,000-crore package announced last month, advance payment of a part of wages was made to Central government employees and cash was offered in lieu of leave travel concession. More such liquidity measures are needed to stimulate consumer demand and investment.
Amid the green shoots, it will be a tall order to make the GDP growth rate turn positive as early as January-March 2021, as hoped for by the RBI. The struggling industry, particularly the Micro, Small and Medium Enterprises (MSMEs), can be firmly back on its feet only if exports and private investment return to somewhere near pre-Covid levels. Here, the government’s intervention has to be timely and facilitative. The World Bank expects India’s growth to rebound to 5.4 per cent in the next fiscal (2021-22). Need-based and time-bound stimulus can go a long way in achieving such a turnaround.