Wednesday, 09 Oct, 2024
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Analysts attribute Odisha's recent economic success to the robust performance of its industry and service sectors. Over the past two decades, the state has consistently surpassed many others, showcasing both rapid growth and sustained progress.
Certainly, it is a prosperous monsoon season for India’s economy as Gross Goods and Services Tax (GST) revenues soared to a record high of Rs 2.10 lakh crore in April 2024. This surpasses the previous record of Rs 1.87 lakh crore set in April 2023. The July 2024 collection, at Rs 1.82 lakh crore, marks the third-highest ever. For the fiscal year to date (April-July), collections have grown by 10.2 per cent, reaching approximately Rs 7.39 lakh crore. These robust figures are based on supply transactions during June, typically a slow month before the onset of the festive season.
According to the latest official data, Maharashtra led the country in GST collections, amassing Rs 28,970 crore. It was followed by Karnataka with Rs 13,025 crore, Gujarat with Rs 11,015 crore, Tamil Nadu with Rs 10,490 crore, and Uttar Pradesh with Rs 9,125 crore. These figures exclude GST collected on the import of goods.
The latest GST data reveals a varied landscape in state-wise collections, highlighting significant differences across regions. The notable surge in tax collections from Nagaland, Manipur, Andaman & Nicobar, and Ladakh suggests increased economic activity and consumption in these developing areas. However, there is an expectation of potential stagnancy or a decline in collections for August, compared to July, due to the monsoon season's dampening effect on overall economic momentum.
The latest GST data reveals a notable trend among states. Odisha saw a striking 24.97 per cent increase in GST collections in July 2024, reaching Rs 2,035.18 crore compared to Rs 1,628.43 crore in July 2023. As per the state finance department, the cumulative state GST collection up to July 2024 stands at Rs 8,866.95 crore, significantly higher than the Rs 7,055.53 crore collected by the same period in 2023, reflecting an impressive growth rate of 25.67 per cent.
Notably, Bihar has surpassed Uttar Pradesh (4 per bcent) and West Bengal (3 per cent) in GST collections, marking a 5 per cent increase in July compared to the previous year. Nevertheless, it still lags behind Odisha in the eastern states category and remains below the national average. In July 2024, Bihar's GST collection reached Rs 1,569 crore, up from Rs 1,488 crore in July 2023.
In May, Finance Minister Nirmala Sitharaman highlighted that Bihar's per capita income was Rs 21,282 in 1991, higher than Odisha's Rs 20,591. However, over the next decade, Odisha's per capita income surged by 31 per cent, while Bihar's fell by 32-33 per cent, dropping to Rs 14,209 by 2002.
Analysts attribute Odisha's recent economic success to the robust performance of its industry and service sectors. Over the past two decades, the state has outpaced many others in terms of growth, showing both rapid expansion and consistent progress. Industry has been the primary driver of this growth, with the service sector now also gaining momentum. The notable rise in GST collections marks a significant milestone for Odisha’s economy, highlighting the success of government policies, enhanced tax compliance, and the resilience of businesses despite various challenges. This achievement underscores the state's potential for continued economic development and growth in the years ahead.
Furthermore, experts note that Bihar is predominantly a consumption-driven state, whereas Odisha is more production-oriented. Odisha’s economy benefits from substantial production of iron ores and minerals, alongside the growth of new service industries. This contrast highlights the different economic strategies and resources that shape each state's growth trajectory.
It's been seven years since the introduction of the GST on July 1, 2017, which unified various state and central indirect taxes under a single system.
Growth in collections for both Central GST (CGST) and State GST (SGST) has been steady, though the pace varies slightly. This divergence likely stems from differences in collection efficiency between the central government and individual states, with state collections trailing slightly behind.
CRISIL, a prominent rating agency, highlights Maharashtra, Karnataka, and Uttar Pradesh as top performers in state-wise collections. However, per capita adjustments reveal that other states exhibit stronger performance, pointing to diverse consumption patterns and spending capacities. Recent data shows that most consumer goods face minimal or no GST, with only a small fraction, less than 3 per cent, subject to the highest 28 per cent tax rate.
