The intersection of India’s economy, GST dynamics, and post-election governance forms a crucial narrative for the nation’s trajectory. Analyzing the latest NSO data, election outcomes, and GST revenue trends provides key insights into India’s economic landscape and policy directions.
Economy
According to latest NSO data released on 31st May 2024, India’s FY 2024 growth rate has been 8.2%. It is for the 9th time since 1961 that GDP growth rate is over 8%. This growth of 8.2% underlines the robust momentum in the economy which may accelerate with the stable government at the centre.
The quarter wise growth during FY 2023-24 has been consistent and stable at 8.2%, 8.1%, 8.6% and 7.8% respectively. The growth momentum is likely to continue in current fiscal of 2024-25 as the domestic economic activities remain resilient, upbeat investment and consumption demand, robust corporate performance and likely good monsoon ahead. Rating agencies too have a positive outlook for India.
Globally, GDP has grown in only 3 of the major 5 economies, i.e. China (5.3%) and UK (0.2%) in contrast to India. OECD expects that US and China economies may slow down in 2025. India continues to be the fastest growing major economy globally.
Election outcome
The results of recently concluded Lok Sabha elections are out with NDA (not BJP) getting simple majority over its rival alliance against an expectation of over 400 seats. The new BJP led NDA Government at the centre is in place with Narendra Modi as a third time Prime Minister in a row from 9th June, 2024. While the core team and the key portfolios remain and are retained by BJP, the new cabinet now represents NDA allies, chiefly JDU and JDP. The new Council of Ministers inter alia, include Rajnath Singh (Defence), Amit Shah (Home & Cooperation), Nitin Gadkari (Highways), Nirmala Sitharaman (Finance & Corporate Affairs), S. Jaishankar (External Affairs), Arjun Ram Meghwal (Law & Justice) and Piyush Goyal (Commerce & Industry).
The stock market which oscillated to top on exit polls and then crashed on counting day is back to recovery and has regained with new glory. With the key portfolios being retained by the erstwhile Ministers in the previous Government, there will be a sense of commitment and continuity in policies and reforms. So far as MoF is concerned, focus shall be on job creation, infrastructure, accelerating private investment, economic and tax reforms, besides long term economic policies and fiscal discipline. On the top of it, focus ought to be on overall economic GDP growth, pace thereof and ensuring that India continue as one of the major fastest developing economies. Thus, growth sustainability should be the top most priority and with this in mind, other focus areas will get addressed. On the down side, policy uncertainty due to other major central banks, geopolitical tensions, sluggish farms sector and rural demand, climate changes and inflation are significant risks to growth.
The most important event to address these objectives and challenges would be the Union Budget 2024-25 to be presented by the Finance Minister sometime next month. This will also highlight focus areas of new Government in current year and next five years. GST reforms, other tax reforms and GST rate rationalization will also need to be addressed for which GST Council will have to be reconstituted and meeting soon convened.
CBIC has issued new instructions for initiation of recovery of tax before three months of service of order. NIC has launched a new E-way bill-2 portal w.e.f. 1st June, 2024 to ensure higher efficiency and will run in parallel to the main e-way bill portal. GSTN has issued an advisory on information from manufacturers of Pan Masala / Tobacco / related products -Special procedure to be followed.
The gross Goods and Services Tax (GST) revenue for the month of May, 2024 stood at Rs. 1.73 lakh crore. This represents a 10% year-on-year growth, driven by a strong increase in domestic transactions (up 15.3%) and slowing of imports (down 4.3%). After accounting for refunds, the net GST revenue for May 2024 stands at Rs. 1.44 lakh crore, reflecting a growth of 6.9% compared to the same period last year.
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