Higher GST collection in October 2021 - A show of economic recovery?

Second highest ever revenue GST collection of Rs.1.3 lakh crores was clocked in October 2021, promoting our finance minister to comment  “This is very much in line with the trend in economic recovery”.    Is this correct assessment?

Consider the below facts

• Fuel prices increased by 23% in 2021 (global oil prices increased by 65% during the same period)
• LPG prices increased by 30% in 2021
• Steel - Hot rolled coil was selling at Rs.54,500 per ton in January 2021 now it is Rs.72,500 per ton - 33% increase
• Palm oil prices increased from $ 1,020 in June to $ 1,125 now
• In March 2021 Hindustan Unilever increased prices across its portfolio by 6% to 14%.  Again in September 2021 there was an increase ranging between 3% to 8%.  For July to September quarter HUL reported 11% year on year sales growth but it volume growth was 4% indicating a 7% price-led growth in this quarter.
• Maruti Suzuki India Limited has cited rising input costs, including escalating prices of raw material such as steel and precious metals, as the key reason behind the soaring prices. Maruti Suzuki increased its price 4 times during this year
• Asian Paints has informed that so far during this financial year they have increased selling prices by 7% as against a 21% increase in input costs

The above facts are only a tip of the iceberg.   Across industrial sectors inflation is soaring prompting almost all companies to increase their selling prices to protect margins.  With increase in prices, volumes are shrinking which means there is recession in the economy.  People are cutting down consumption to offset increase in prices.  

This unprecedented price increase is increasing GST collection in the country and not growth of economy.  This is not a sustainable tax growth.  

There needs to be strategies in place to smoother input cost increases, else there will be larger dip in GST collections.