Context: Goods and Services Tax (GST) revenues data for the first nine months of 2023-24 reveal weak consumer expenditure because of uneven consumption growth across States.

Regional Disparity in State GST Collections

• The National Statistical Office estimates private final consumption expenditure (PFCE) will grow 4.4% in 2023-2024, the slowest since 2002-03.
  • The Private Final Consumption Expenditure (PFCE): It is  the expenditure incurred by the resident households and non-profit institutions serving households (NPISH) on final consumption of goods and services, whether made within or outside the economic territory.
• State GST Growth rates: Among the 20 largest States that account for nearly 97% of State GST collections, the regional disparity in consumption growth is visible.
  • Gujarat (9.5%) and West Bengal (9.8%) have clocked growth in single digits.
  • Odisha, Rajasthan, and Chhattisgarh have grown at rates lower than the national average of 15.2%,( being attributed to  tepid rural demand due to weaker farm sector outcomes)
  • States such as Madhya Pradesh, Maharashtra, Karnataka, Haryana, Uttar Pradesh, Tamil Nadu and Telangana have seen State GST revenues rise in a range of 17% to 18.8%.
• Wage Growth: As per India Ratings and Research economists, it has turned marginally negative for lower-income households while rising 6.4% for their upper-income counterparts in the second quarter of this year.
  • Rising Inequality: Ongoing consumption demand is skewed in favor of goods and services consumed largely by households belonging to the upper-income bracket. 

Must Read: Resolving Regional Disparities: States in South are more developed than North

News Source: The Hindu

DOWNLOAD PDF