E-Way Bills Surge 17.6% Year-On-Year; Signaling Economic Activity Growth

In December 2024, the number of e-way bills generated by businesses for transporting goods within and across states saw a significant increase, growing 17.6% year-on-year to reach 112 million. This marked the second-highest level in the past 24 months, according to data released by the Goods and Services Tax Network (GSTN).

The surge in e-way bills follows a five-month low of 101.8 million recorded in November 2024. E-way bills, required for consignments worth more than Rs 50,000, serve as an early indicator of economic activity by providing insights into demand and supply trends. As a result, e-way bill data often correlates with macroeconomic indicators, albeit with a time lag.

The increase in e-way bills expect to reflect in the Goods and Services Tax (GST) collection data for January 2025, set to release on February 1. As businesses transport more goods, the higher generation of e-way bills indicates a boost in economic activity. Additionally, with the end of the quarter approaching, businesses typically see a rise in sales, contributing further to the uptick in e-way bill volumes.

December’s E-Way Bills And Comparison With Previous Months

The number of e-way bills in December was notably higher than in November, reflecting an increase in business activity. However, the highest number of e-way bills in recent months was recorded in October, when 117.2 million bills were generated due to the festive season.

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Pratik Jain, Partner at PwC, pointed out that the sequential rise in e-way bills is a positive indicator of higher consumption in December compared to November. “It would logically mean that the GST collection in January (for transactions pertaining to December) should be higher than the previous month,” Jain said.

Bipin Sapra, Tax Partner at EY India, also expressed optimism regarding the increase in e-way bill numbers, seeing it as a sign of increased manufacturing activity, which typically signals economic recovery and growth. “With three months to go for the financial year to close, this growth should help get the GDP growth back on track,” Sapra added.

Contradiction With PMI Data

Despite the positive trends in e-way bill generation, the performance contrasts with the HSBC India Manufacturing Purchasing Managers’ Index (PMI), which showed a slowdown in growth for December. The PMI dropped to a 12-month low of 56.4, as reported by S&P Global. This suggests that while goods movement is up, other manufacturing indicators might still be experiencing challenges.

Overall, the rise in e-way bills in December is a positive signal for the economy, reflecting increased goods movement and potentially higher GST collections. However, the divergence with PMI data indicates that challenges in some sectors may persist.