Glee.S.T! January 2021 GST collection may have beat the December record

• More than ₹1.2 lakh crore may have been collected in January, compared to ₹1.15 lakh crore in December 2020, which itself was an all-time high.
• The government's total collection from goods and services tax (GST) may now be short of its target by just ₹11,000 crore.
• This is significant for it shows the recovery in economic activity as well as eases the fear of a cash crunch ahead of the upcoming Budget.

More than ₹1.2 lakh crore may have been collected in January, compared to ₹1.15 lakh crore in December 2020, which itself was an all-time high, according to the Ecowrap report report put out by the State Bank of India.

This is significant for two reasons: it shows a stronger-than-expected recovery in the economy and eases the fear of a cash crunch ahead of the upcoming Budget. The government's total collection from goods and services tax (GST) may now be short of its target by just ₹11,000 crore.

This is significant for it shows the recovery in economic activity as well as eases the fear of a cash crunch ahead of the upcoming Budget. "Government surplus cash balances have increased significantly recently. The number has increased to ₹3.34 lakh crore as on Jan 28, 2021 compared to ₹1.08 lakh crore in Sep 2020," the report added.

This can reduce the amount of money the government needs to borrow, and therefore, curb the need for higher interest rates, all of which will contribute to the economic recovery, SK Ghosh, the Chief Economist at the country's largest bank said. This will be music to Finance Minister Nirmala Sitharaman's ears.

This further bolsters the bulls who have took the Sensex to a new record before it cooled off. In an interview with Business Insider, Nilesh Shah, MD of Kotak Mahindra Asset Management Fund⁠— also a part-time member of the Prime Minister’s Economic Advisory Council⁠⁠— cited the spike in GST collections ⁠in December, aside from data from the Google mobility index and the RBI’s foreign exchange reserves to show that the Indian economy is recovering fast. “Put all of this data together, we are seeing a month-on-month improvement in the economy,” Shah explained.


Industrialist Kumar Mangalam Birla too in a recent note on LinkedIn too pointed out the “swiftness with which we have seen recovery play out across sectors" and Aditi Nayar, economist at ICRA, said that the recession in India will end latest by March 2021.


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