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Inflation-adjusted GST revenue up 26% in FY23, says SBI chief economist- The New Indian Express

By Express News Service

NEW DELHI: State Bank of India (SBI) chief economist Soumya Kanti Ghosh on Thursday rejected claims that growth in GST has been primarily because of high inflation. Ghosh in a report released by SBI said inflation-adjusted GST revenue for FY23 shows the average collection has been nearly Rs 1.20 lakh crore. According to him, the increase in GST revenue could be pure consumption. There has been a 26% surge in inflation-adjusted GST from the pre-Covid level of Rs 95,000 crore. It has been above Rs 1.4 lakh crore for five months in a row.

“Tax revenue has been robust with record high GST revenues, which have been possible because of increased compliance and higher economic activity,” said the report. The report stated that the windfall gain tax and additional tax revenue owing to GST over and above the budget are likely to provide relief to the fiscal situation. In addition, higher nominal GDP will provide a cushion, thereby fiscal deficit is likely to come to around 6.5% of GDP.

On the concern over the ballooning trade deficit, Gosh said that the trade deficit comes at 8.5% of its GDP projections for FY23, much lower than the peak deficit of 10.7% of GDP achieved in FY13. Thus, he felt, the current situation is much better than that in 2012-13. SBI has revised its current account deficit (CAD) estimates from 3.2% of GDP to 3.7% of GDP for FY23.

The trade deficit has widened to a record high of $31 billion in July 2022, owing to a decline in exports to $35 billion from over $40 billion in the previous month, while imports remained strong at $66 billion. On the exports front, petroleum products exports witnessed a policy intervention to combat inflation locally and anchor domestic demand whereas gems & jewellery, chemicals, and readymade garments saw muted/softer demand from key markets battling recessionary fears with consumer sentiments and expectations entering frosty zones.

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