GST helped households save ₹45,000 crore per month from Dec 2017 until Mar 2023: White Paper

Union Finance Minister Nirmala Sitharaman on Thursday tabled the White Paper in Parliament, highlighting the "failures" of the Congress-led UPA government and how BJP-led NDA turned things around. The White Paper showed how Prime Minister Narendra Modi-led NDA government addressed multiple issues, from tax reforms to ensuring public resources such as coal and telecom for betterment of the society.

As per the report, the introduction of the Goods and Service Tax (GST) was a much-needed structural reform to improve revenue collection and compliance. Comparing tax collection during the UPA government’s 10-year tenure, the report highlights that the average tax-GDP ratio for FY15 to FY24 RE is about 10.95%, higher than the ten-year average of 10.5% during 2005-14. “This is despite lower tax rates and widespread relief extended during the Covid-19 pandemic,” it adds.

The report claims that GST has helped households save nearly ₹45,000 crore per month from December 2017 until March 2023. At the same time, monthly average GST revenue has increased from ₹90,000 crore in FY18 to ₹1.7 lakh crore in FY24.

“Prior to the introduction of the GST, the mélange of state levies, more than 440 tax rates, excise duties and the compliance requirements of multiple agencies administering these rates meant that India’s internal trade was neither free nor united. The implementation of the reform entailed unifying 29 states and 7 union territories, which, due to their different tax structures, were economic territories on their own,” it notes.

The White Paper says that the Modi government accepted the recommendations of the 14th and 15th Finance Commission, which had acknowledged states as equal partners in economic development. The report says that around 41-42% of central taxes have been shared with the states every year over the last decade, a substantial jump from the earlier “devolution” share of 30-32%. Consequently, the quantum of resources devolved to states jumped to ₹84.3 lakh crore between FY15 to FY24 RE, up 3.8 times from ₹22.1 crore during FY05 to FY14 (UPA regime), which accounts for about 1% of GDP.

The report also highlighted that the government took multiple reforms in the coal sector in the last ten years to address the inefficiencies and enhance competition and transparency in the mining space. The level of coal production reached the highest level of 893.19 metric tonnes (MT) in FY23, which implies a growth of about 57.8% over the coal production of 565.77 MT in the year FY14.

“The CAGR of coal production from FY09 to FY14 was 2.8 per cent, if this had continued the coal production in FY23 would have been 725.39 MT,” it added.

In a bid to energise and empower the power sector, the NDA government addressed multiple issues to transform it from power-deficient to power-sufficient, the White Paper noted. “Under the stewardship of our government, the country rapidly recovered from a situation of having two-thirds of coal-based power plants with critical coal stocks (in 2014) to having not even a single power plant in the country facing a critical coal stock level in 2015. The critical issue of power deficiency has been addressed by adding 196558 MW of generation capacity since April 2014, and India has also attained the target of “One-Nation, One Grid – One Frequency.”

Highlighting the transformation in the telecom market, the report says that the government has taken several steps in the last 10 years to correct the situation in the sector and to effectively handle the failures that resulted from the lack of clarity in policy during UPA tenure. “It brought transparent methods of spectrum auction, trading and sharing that further enabled the optimal utilisation of spectrum.”

As per the report, the government conducted 5G auction in 2022, increased the overall spectrum availability for the telecom service providers (TSPs) by allocating the highest-ever quantum of spectrum, i.e., 52 GHz, at the highest-ever auction value. Also, healthy cash flow for telecom companies enabled them to make capital investments in 5G technology, leading to the rollout of 5G network in the country, which is acknowledged as the fastest 5G rollout in the world, it says.

The report adds that policy measures have boosted the cumulative gross revenue of all telecom service providers, which has already crossed ₹3 lakh crore.