At 5.4%, India’s economy grew at its slowest pace in almost two years in July-September, dampening the growth outlook for the full year. The slump was largely due to weaker manufacturing, mining and electricity and gas production.
That weakness is likely to show in muted GST collections as well.
“Considering the recent GDP data for the September 2024 quarter, we anticipate a slowdown in tax collections over the next four months,” said Saurabh Agarwal, tax partner at EY. “The global geopolitical scenario and potential consumer spending cuts could further exacerbate short-term economic growth.”
While the recent surge in tax collections—especially in states like Delhi, Maharashtra, and Karnataka—can be linked to the festive season, it’s too early to celebrate this as a broader economic trend. In fact, month-on-month collections have declined despite festive boost, Agarwal said.
Experts also expressed concerns over negative growth in some of the manufacturing states of Rajasthan and Chhattisgarh. That could have considerable economic impact.
“The slower single-digit growth in some large states like Haryana (2%), Punjab (3%), UP & MP (5%), Tamil Nadu (8%), Telangana (3%) as well the negative growth in Rajasthan (-1%), Andhra Pradesh ( -10%), Chhattisgarh (-1%) would be an area of concern as they have significant manufacturing presence and considerable economic impact,” said MS Mani, partner at Deloitte India.
Delhi, Maharashtra and Karnataka witness uptick in GST collections mainly due to festive demand. Besides, the mop-ups in Jammu & Kashmir, Bihar, Sikkim, Mizoram, Tripura, Assam, and Odisha pointed towards positive economic momentum in these regions.
“The domestic GST revenue growth of 10%-plus in FY25 seems to support the GDP data which indicates increase in domestic consumption,” Mani said. “The import GST revenue growth of 6% also backs foreign trade data which indicates slower growth of non-petroleum imports.”
