E-way bills for Feb show moderation

At 81.8 million, e-way bill generation indicates a mid-quarter dip, but year-end inventory clearance by companies could boost goods shipment in March. E-way bill data, a high-frequency indicator of consumption, shows that the number of permits raised often goes up in the last month of every quarter. E-way bills in February point to transportation activity in the month for which taxes are collected in March.

Quoting its February manufacturing purchase manager’s index figure, S&P Global had said earlier this month that India’s manufacturing industry sustained robust output growth halfway through the final fiscal quarter, but it was driven mainly by the domestic market. It pointed out a notable slowdown in the rate of international sales expansion of the 400 companies it surveyed. Although companies continued to scale up input purchases, capacity utilization was not under pressure, S&P said on 1 March while reporting the 20th consecutive month of production growth, with manufacturing PMI at 55.3 in February.

India’s exports have weakened since October due to a global decline in demand. Excluding November, exports have declined in three out of four months since October.

“The e-way bill generation numbers for February 2023 (81.8 million) need to be seen in the context of an 18% jump from February 2022 (69.1 million), which is a good sign of growth. February being a 28-day month, flat numbers compared to January were expected. We can expect the e-way bill generation to touch record numbers in March 2023,” said Gautam Mahanti, business head at IRIS Business Services, which operates a private GST e-invoicing registration portal.

According to Sanjay Chhabria, director at Nexdigm, a business advisory, e-way bill generation is an ancillary activity which determines the movement of goods, but the number of such permits raised in a particular period cannot be linked directly to the revenue collections as instances like internal stock distribution or re-distribution within a company across locations will need e-way bills, but may not translate into revenue collections.

“However, having said that, with the upcoming festivities in March and April, we could once again witness a hike in the consumption of goods which, in turn, should contribute to high manufacturing growth,” said Chhabria.

A pick-up in economic activity will support a 7% GDP growth in FY23 after the third quarter growth slowing down to 4.4% compared with a 5.2% expansion in the year-ago period.

India Ratings & Research said in an analysis on Monday that it believed there are downside risks to the 7% growth projected in the second advance estimate for FY23 by the National Statistical Office and that the actual GDP growth may come in lower.