The high frequency indicator aligns with manufacturing PMI data for August which suggested strong demand and output growth in August.

The sharply higher e-way bill data points to businesses pushing supplies to the market as the festive season kicks in. The previous highest level of e-way bill generation of 90.9 million was reported in March, resulting in the highest ever GST revenue collection of ₹ 1.87 trillion in April. Tax payments to government for sales in a given month is made in the subsequent month.

Data from GSTN, the company that processes GST returns, showed that e-way bill generation shot up by over 19% in August from the year-ago level and by over 6% from the previous month.

"Both increased compliance obligations and build-up of festive stocking of goods which typically starts in August are likely to have contributed to the surge in e-way bill generation in August, which can be seen as a precursor to strong GST collections in September," said M.S. Mani, partner, Deloitte India.

A string of festivals starts with Onam in August, followed by Ganesh Chaturthi, Dussehra and Diwali and continues till Christmas in December. These months usually see a surge in freights charged by trucks, prompting many businesses to get their supplies at the retail level in advance.

From 1 August, the sales threshold for businesses to report wholesale transactions in designated portals (e-invoicing) has been halved from ₹10 crore to ₹5 crore. This also contributes to increased e-way bill generation activity for transportation of goods. The e-invoice transaction data feeds automatically into other tax documents like e-way bills and the GST returns.

The government is banking on sustained consumption and investment demand for the projected 6.5% economic growth this year although high interest rates and inflation, which has breached the RBI's tolerance level in July to touch 7.44%, are posing macroeconomic challenges. Separately, official data showed that Indian Railways loaded 126.95 million tonnes in August against 119.33 million tonne a year ago, showing a 6.38% growth, indicating improved goods shipment and economic activity.

Auto sales, another high frequency indicator too showed improvement in August. Federation of Automobile Dealers Association said on Tuesday that the automotive retail sector registered a robust 9% annual growth in August. The uptick was consistent across multiple vehicle categories, with two-wheelers seeing a 6% increase, passenger vehicles growing at 6.5%, tractors growing by 14%, and commercial vehicles by 3%, with the festive season, beginning with Onam, uplifting market mood and liquidity.