Economy on its feet, but not out of woods

The pandemic-ravaged Indian economy remains on the path to recovery, showing signs of a stronger upturn on the back of the festival season impetus, going by the latest data on GST collections, auto sales, Railway freight and Manufacturing PMI for November, all of which were released on Tuesday.

The upturn was also becausde of the release of pent-up demand post the nearly six-month lockdown in the wake of the Covid-19 pandemic. An improvement in market conditions and a pick-up in demand saw the economy getting back on its feet.

However, economy watchers warn that one should not jump to call it a “full blown revival” as yet; they recommend a wait-and-watch approach to see if the positive trend sustains in the coming months.

On Tuesday, the Centre announced that GST collections had crossed ₹1-lakh crore for the second straight month to touch ₹1,04,963 crore in November. This was lower than October’s ₹1,05,155 crore, but higher than the ₹1,03,491 crore mop-up in November 2019.

The IHS Markit Manufacturing PMI for November came in at 56.3, consistent with the sharp expansion seen in recent months. Although lower than October’s 58.9 — a decadal high — it did indicate that the momentum in manufacturing is intact. With a marked increase in new export orders in November, things look bright on the external trade front, too, say experts.

Key indicator

A key indicator of the manufacturing sector, and even the economy, the auto industry — from cars, two-wheelers to commercial vehicles and tractors — continued the sales momentum on a year-on-year (YoY) basis in November in the domestic market. However, on a sequential basis (month-on-month, or MoM), all the categories showed a decline.

In the commercial vehicle segment, only Ashok Leyland reported a growth in numbers — both MoM and YoY. Others, including Tata Motors, Volvo Eicher, and Mahindra & Mahindra, recorded a decline compared with October sales. In the passenger vehicle segment, market leader Maruti Suzuki reported a decline in sales, both YoY and MoM. It posted sales of 1,35,775 units in November in the domestic market, a drop of 2 per cent compared with 1,39,133 units in the previous year period. In October, it had sold 1,63,656 units.

Railway freight remained on the fast-track in terms of earnings and volumes last month. While November loading, at 109.68 million tonnes, was 9 per cent higher compared to November 2019’s 100.96 mt, earnings rose 4 per cent to ₹10,657.66 crore (₹10,207.87 crore).