Remember when the goods and services tax (GST) out of India was a “bad idea”? It was received half-heartedly at best by Mr. Market. Only a wee bit better than the rupee cash money kill that took smaller notes out of circulation. But on Monday, investors saw that the plan to unify the tax code across state lines worked. The state is indeed taking in more tax revenue. And that is good for India because more money is always good for developing nation.
India has been an underperformer all year compared to the benchmark MSCI Emerging Markets Index. Wisdom Tree India Earnings (EPI) and MSCI India (INDA) are both getting beat by it. They are in the red. After the news of solid tax revenue due to GST came in yesterday, EPI started trading above its 200-day moving average. All India needs now is for Warren Buffet to signal that India is an emerging market he’s looking into. Buffett will speak during the May 5 Berkshire Hathaway meeting.
According to India’s Ministry of Finance, the average monthly collection under the GST regime for the last eight months — August 2017-March 2018 — was around 900 billion rupees (89,885 crore rupees), or about $13 billion.
Finance Minister Arun Jaitley gave himself a pat on the back on Twitter yesterday, saying, “Increased tax collections will help the nation to expand its economic horizons and take it to loftier heights.”
Higher tax collection from GST “reflects the upswing in the economy and better compliance” with the law, Jaitley’s Finance Ministry said in a statement.
The GST was one of the signature economic policies of Prime Minister Narendra Modi, now in his fifth year as India’s chief executive.