According to a recent report by Crisil, a leading global analytics company, aggregate state GST collections in India are expected to witness a moderation in growth to 12-14% in the fiscal year 2023-2024 (FY24). This projection indicates a slowdown compared to the previous years.
The Crisil report highlights several factors contributing to this moderation. One of the key factors is the anticipated impact of the economic disruptions caused by the COVID-19 pandemic. While the economy is on a recovery path, the pace of revival is expected to be gradual, leading to a lower growth rate in GST collections.
Furthermore, the base effect from the high growth witnessed in the previous fiscal years is also a contributing factor. The GST collections had rebounded sharply in FY22 after a significant contraction in FY21 due to the pandemic-induced lockdowns. As the base effect diminishes, the growth rate is likely to stabilize.
The report also emphasizes the importance of structural reforms and policy measures in sustaining GST collections. The government’s efforts to widen the tax base, improve compliance, and curb tax evasion will play a crucial role in augmenting GST collections in the long run.
The moderation in GST collections growth has implications for the overall economic growth and fiscal health of the states. GST revenue is a significant source of revenue for states, and any moderation in its growth rate can impact their fiscal planning and expenditure capacity.
However, it is worth noting that the projected growth rate of 12-14% is still healthy, considering the economic challenges faced in recent times. The GST system continues to evolve, and the government’s focus on enhancing compliance and streamlining the tax structure will support future revenue growth.
In conclusion, the Crisil report forecasts a moderation in the growth of aggregate state GST collections to 12-14% in FY24. The report underscores the need for sustained structural reforms and policy measures to bolster GST revenue. While the moderation in growth has implications for state finances, the projected growth rate remains respectable, given the prevailing economic conditions.
