E-way bills in May treble from April levels; Still behind pre-March levels

This indicates that GST revenue for May, but collected in June, could recover after reporting a close to 85% shortfall in April vis-a-vis last year

The generation of goods and services tax (GST) e-way bills trebled in May compared to the previous month, but were half the level seen in the pre-March levels, indicating only a gradual pick up in economic activity as Covid-19 lockdown conditions started easing.

This indicates that GST revenue for May, but collected in June may show recovery after reporting a close to 85 per cent shortfall in April vis-a-vis last year.

About 25.4 million e-way bills were generated on the GST Network portal in May compared to 8.6 million in April. The level was however, less than half of that seen in February, the pre-lockdown month at Rs 5.75 crore and 5.42 crore in May last year.

Under the GST regime, e-way bill has to be generated if goods worth over Rs 50,000 are transported.

Inter-state movement of goods remained subdued during the month with some states imposing restrictions amid Covid.

The E-way bills generated for inter-state movement of goods at 8.3 milliom were about half the 17 million generated for supply of goods within the state, the GSTN data showed.

In the pre-lockdown months, the e-way bills for inter-state movement of goods are generally only about 30 per cent lower than the intra-state e-way bills.

M S Mani, partner, Deloitte India said that while it is expected that the quantum of e-way bills issued will increase, it would take a few more months to reach the pre-March levels.

While June figures may show further improvement, the economic activity will continue to grow at a tepid pace, according to economists, as the lockdown in some form will continue till at least the end of the month.

Soumya Kanti Ghosh, chief economic adviser, State Bank of India said that, “In April there was almost no activity. In May, it has only picked up marginally. However, with an extended lockdown till June 30, June will also see only a tepid growth.”

Besides, the dwindling demand due to the Covid-19 and government’s inability to address the consumption side of the problem is expected to further put GST revenues under pressure.

Sunil Kumar Sinha, principal economist, India Ratings said in a note that the near absence of demand-side measure in the economic package of Rs 20.97 trillion will jeopardise recovery even in FY22 and FY23 and may even lead to a second round impact on the economy. 

“Which means even if the supply side gets restored on account of the various measures announced by the government/Reserve Bank of India, it may soon run into difficulty due to the lack of adequate demand for goods and services. Salary cuts/job losses/reverse migration due to the lockdown have only added to the dwindling consumption demand, already reeling under the reduced income growth of households coupled with a fall in savings and higher leverage over the past few years,” Sinha said.

The Centre could collect just Rs 5,934 crore as its share of GST in April this financial year. The amount was 87 per cent lower than Rs 46,848 crore collected in the same month last year. Most states have also reported a shortfall between 83 per cent and 93 per cent in GST collections for April.

Economic growth for the current fiscal is estimated to remain muted, with most forecasts pointing at a recession. In fact, ratings agency Crisil has projected 2020-21 to see the worst recession in country’s history, with GDP to contract by 5 per cent. It has further said that about 10 per cent of GDP in real terms could be permanently lost, so going back to pre-Covid growth rates was unlikely over the next three years. While former chief statistician of India Pronab Sen has projected a 10.8 per cent decline in GDP for FY21.

The Reserve Bank of India last week said that India's GDP growth will be in negative territory in 2020-21 as the outbreak of coronavirus has disrupted economic activities.

An e-way bill is valid for up to 24 hours for a distance of 100 km, depending on the size of the vehicle. However, if the vehicle does not cover 100 km within 24 hours, another bill has to be generated. For every 100 km travelled, the bill is valid for one additional day.