172@29@17@249!~!172@29@0@53!~!|news|business|economy|state-wise-gst-mop-up-for-july-shows-no-economic-recovery-from-covid-19-slowdown-5654981.html!~!news|moneycontrol|com!~!|controller|infinite_scroll_article.php!~!is_mobile=false
Subscribe to PRO at just Rs.33 per month. Use code SUPERPRO
Last Updated : Aug 06, 2020 05:26 PM IST | Source: Moneycontrol.com

State-wise GST mop-up for July shows no economic recovery from COVID-19 slowdown

GST collections account for almost 60 percent of states' revenues. The nationwide lockdown imposed to contain the outbreak of the COVID-19 pandemic led to falling GST collections. Though the lockdown restrictions have been mostly lifted, rising number of cases have resulted in a rise in the number of containment zones, which have continued to hit supply chains

State-wise Goods & Services Tax (GST) collections in July showed an 11.1 percent month-on-month dip in most states, except a few small ones, government data revealed.

State-wise GST collections is a proxy for manufacturing and services activity in the economy.

Last month, Prime Minister Narendra Modi invited global companies to set up businesses in India, and said that the country is already seeing green shoots of an economic recovery.

Close

GST collections account for almost 60 percent of states' revenues. The nationwide lockdown imposed to contain the outbreak of the COVID-19 pandemic led to falling GST collections. Though the lockdown restrictions have been mostly lifted, rising number of cases have resulted in a rise in the number of containment zones, which have continued to hit supply chains.

COVID-19 Vaccine

Frequently Asked Questions

View more
How does a vaccine work?

A vaccine works by mimicking a natural infection. A vaccine not only induces immune response to protect people from any future COVID-19 infection, but also helps quickly build herd immunity to put an end to the pandemic. Herd immunity occurs when a sufficient percentage of a population becomes immune to a disease, making the spread of disease from person to person unlikely. The good news is that SARS-CoV-2 virus has been fairly stable, which increases the viability of a vaccine.

How many types of vaccines are there?

There are broadly four types of vaccine — one, a vaccine based on the whole virus (this could be either inactivated, or an attenuated [weakened] virus vaccine); two, a non-replicating viral vector vaccine that uses a benign virus as vector that carries the antigen of SARS-CoV; three, nucleic-acid vaccines that have genetic material like DNA and RNA of antigens like spike protein given to a person, helping human cells decode genetic material and produce the vaccine; and four, protein subunit vaccine wherein the recombinant proteins of SARS-COV-2 along with an adjuvant (booster) is given as a vaccine.

What does it take to develop a vaccine of this kind?

Vaccine development is a long, complex process. Unlike drugs that are given to people with a diseased, vaccines are given to healthy people and also vulnerable sections such as children, pregnant women and the elderly. So rigorous tests are compulsory. History says that the fastest time it took to develop a vaccine is five years, but it usually takes double or sometimes triple that time.

View more
Show

Other indicators like Purchase Manager's Index point to a slowdown in economic activity, as manufacturing PMI fell to 46 in July, for the first time in four months, from 47.2 a month ago due to the extension of the lockdown.

State-wise GST data shows that the dip in collections is true for both consumer and manufacturing states.

Consuming states like Punjab and Kerala have seen a significant month-on-month decline in GST collections. Punjab and Kerala saw a 11.5 percent and 13.8 percent fall in collections month-on-month, respectively.

The scenario is similar for manufacturing states too. GST collections in Maharashtra and Tamil Nadu fell 19.8 percent and 7.8 percent MoM, respectively. For Delhi, GST collections in July fell 23.8 percent.

Most of these states have seen a huge rise in the number of positive coronavirus cases, forcing states to reimpose lockdowns. In Punjab, on an average, new coronavirus cases almost tripled in July compared to June. Kerala, which had earlier successfully containing the virus, saw a six-fold increase. Average number of new cases has more than doubled in Maharashtra and Tamil Nadu in July from a month ago.

The data indicates that consumer spending  have been hit in July due to rising number of COVID cases in states and re-imposition of restrictions to curb its spread.

The Indian economy was in a slowdown even before the COVID-19 pandemic hit India. This was reflected in the weak economic indicators and slowing GST collections. In October, payments to states got delayed as collections were lower-than-expected.

Though the Centre has paid states their dues for FY20, falling collections and bleak growth expectations for FY21 have put the Centre in a fix on how to continue compensating states.
First Published on Aug 6, 2020 05:25 pm
Sections