The goods and services tax (GST) income in India increased 13% in October to 1.72 lakh crore, the second biggest monthly collection since the levy's implementation in July 2017, thanks to strong festive demand and improved compliance.
The seasonally adjusted S&P Global India Manufacturing Purchasing Managers' Index (PMI) fell to 55.5 in October from 57.5 in September, the smallest increase since February.
Other volatile indicators stayed stable. Last month, automakers delivered a record 391472 passenger vehicles to dealers, up 16.3% from 336,679 the previous year. In October, goods loading on Indian Railways increased by 8.47% to 129.03 million tonnes. In October, electricity usage increased 21% month on month to 138.9 billion units, owing to a hotter-than-usual first half of the month. Diesel and petrol sales by oil retailers increased 5% and 3%, respectively, year on year.
Most indices, according to economists, remain robust, although there are hints of slowing growth. "India's manufacturing sector generated substantial growth in October, despite a challenging global economic environment," said Pollyanna De Lima, S&P Global Market Intelligence's economics associate director.
Sales of Two-wheelers
"Still, insights from surveyed purchasing managers pointed to the deceleration of several measures," she went on to say. The conflict in West Asia, rising US interest rates, and volatile oil prices all contribute to the anxiety, according to the economists.
Core sector output increased by 8.1% in September, down from a double-digit 12.5% increase the previous month. Tractor sales decreased in October compared to the same month last year, indicating sluggish rural demand following a spotty monsoon. According to Tractor Junction, an online aggregator of tractor and farm equipment, they fell 5% to 117,714 units from 123,526 units.
Domestic motorbike and scooter sales surged by double digits last month, owing to improving consumer optimism during the holiday season. Hero MotoCorp, the market leader, recorded a 26.4% increase in October, selling over 500,000 units in the domestic market. In August, industrial production rose to a 14-month high of 10.3%, fueled by a pre-Christmas spike. A PMI number greater than 50 implies expansion, whereas a value less than 50 suggests contraction.
According to the study, total new orders, production, exports, purchasing levels, and purchase stockpiles all increased significantly, albeit at a slower pace. Hiring has slowed, and company optimism has fallen to a five-month low.
"The October manufacturing PMI corresponds with hard data on industrial production; both indicators remain elevated, but signal slowing growth," Rahul Bajoria, MD and head of EM Asia (ex-China) economics at Barclays, stated.
Increasing compliance
The gross GST revenue was Rs 11.64 lakh crore until October. Monthly income has surpassed Rs 1.60 lakh crore for the fifth time in the current fiscal year, thanks to a 13% increase in domestic transactions, indicating an increase in consumption. This is the ninth month in a row that the monthly GST collection has exceeded Rs 1.5 lakh crore.
"A mid-year collection of such an increased number is definitely worth a cheer, and the ongoing festivities-driven consumption could help this continue," said Abhishek Jain, KPMG's indirect tax head and partner.
Tax authorities' use of technology and data to detect evasion has also contributed to an increase in GST collections.
"The remarkable growth in GST collections over the past few months is not only on account of the underlying strong economic factors, but also due to the efforts of the tax authorities in deploying tools to compare data sets to determine short payment and evasion," said MS Mani, a partner at Deloitte India
"India is working well towards increased collection," said EY tax partner Saurabh Agarwal. With the collection stabilized, the government can now focus on rate rationalization."
According to ICRA, October revenue was more than predicted, and total income for FY24 is likely to exceed budgeted predictions. "At the moment, we expect CGST (central GST) collections to slightly exceed the FY2024 BE," said Aditi Nayar, ICRA's chief economist.
The CGST is Rs 30,062 crore, the state GST (SGST) is Rs 38,171 crore, and the integrated GST (IGST) is Rs 91,315 crore, comprising Rs 42,127 crore collected on imports. The cess collection totaled Rs 12,456 crore, including Rs 1,294 crore on imports.