SBI Research on Inflation,Trade Deficit and Current Account Deficit:
State Bank of India has recently released a report based on recent research conducted by SBI itself on current inflation target, trade deficit and current account deficit and its connection with the Goods and Services Tax (GST) collection of our country.
According to the report, the current inflation in the country is at its high level around 8% of the GST collection. Although this year the Goods and Services tax revenue is 26% higher than the previous year when the country was dealing with the COVID emergency. The high GST collection is purely due to high consumption, according to the report of the SBI.
Other estimations in the report:
In this report, State Bank of India has changed its previous target of current account deficit. Now it is higher than the previous target. According to the SBI officials, the current account deficit is 3.7% of GDP in this financial year.
It has also raised its trade deficit target to 8.5% of GDP in the financial year 2022-23. There are a few reasons for less exports according to the reports and these factors are the norms and steps of the government to control inflation in the country.
About GST collection:
Although this year’s GST revenue is higher, around 1.4 lakh crore for the last few months if we compare it with the last year’s revenue. In the month of July the Goods and Services tax collection was the second highest at almost 1.49 lakh crore. It is 28% higher than the GST revenue a year ago in 2021.
According to the reports there are also a few factors that contribute to the increasing GST collection. These factors include higher inflation, better economic recovery and better conformity.
Inflation adjusted GST revenue:
State Bank of India measures inflation with the help of inflation adjusted Goods and services revenue. According to the report the change in gap between the actual GST collection and inflation adjusted GST revenue increased to the higher level since mid-2021.
The report also states that the average inflation adjusted Goods and Services tax revenue is around 1. 2 lakh crore for the financial year 2022-23. There is a rise of 26% in the inflation adjusted Goods and Services tax revenue.
Even when the country is dealing with higher inflation, the GST revenue is high for the last few months. It is due to the high consumption level of the country, according to the report.
In the financial year 2012-13 the trade deficit was at its peak around 10.7% of GDP of the country in that year. This year it is high but in the comparison of 2012-13 it is lower than its peak, according to the facts in a report of the State Bank of India.
SBI officials said that the present situation of trade deficit in our country is far better than what existed in the financial year 2012-13.
Questions and answers:
Q1. What is the trade deficit target according to the State Bank of India?
Ans. 8.5% of GDP.
Q2. What is the target of the current account deficit according to the SBI?
Ans. 3.7% of GDP
Q3. In which month the GST revenue is second highest?
Ans. July 2022 around 1.49 lakh crore.