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Indian economy is well-placed on the path to swift recovery, a report by the Finance Ministry said on Monday.
This remark has come at a time, when Reserve Bank of India has decided to stick to GDP growth rate of 9.5 per cent for current fiscal even when other agencies lowered the projection or stick to lower projection. Fitch cut the projection to 8.7 per cent from 12 per cent, while World Bank retained the growth rate of 8.3 per cent.
“Sustained robust growth in agriculture, strong rebound in manufacturing and industry, resumption of services activity, buoyant revenue collections and improved fiscal position bear testimony to resilience of the Indian economy,” Monthly Economic Report prepared by Economic Affairs Department of the Finance Ministry said.
Earlier this month, a release by IHS Markit said that Purchasing Managers’ Index for Manufacturing rose to 53.7 in September from 52.3 in August. Though, Services PMI is down to 55.2 in September from 56.7 in August, still it is in the expansion mode. Now, government will come out with data related with industrial growth on Tuesday.
The report said that latest trends in high frequency economic indicators in August and September further indicate a broad-based recovery evidenced in sustained improvement in power consumption, rail freight activity, e-way bills, robust GST collections, highway toll collections posting a 21-month high, sequential uptick in air freight and passenger traffic, and quantum leap in digital transactions.
“While automobile registrations and sales remain affected by global shortage of semiconductor chips, post-monsoon festive season is expected to boost demand. Continued decline in growth of currency in circulation since August is indicative of decreasing demand for precautionary savings with progressive reopening of the economy,” the report said.
Green shoots in farm sector
Talking about agriculture, it noted that satisfactory monsoon enabled healthy sowing of Kharif crops at 0.2 per cent higher than last year and 4.6 per cent higher than last five-year average. Also, this is reflected in production estimates of the current year.
“According to First Advance Estimates, production of major Kharif crops for 2021-22 is estimated at record 150.5 million tonnes, higher by 12.71 million tonnes compared to the average food grain production of previous five years,” it said.
E-way bills, GST rise
In industry, one tool to track the progress is E-way bill. Total e-way bills generated stood at 6.8 crore in September 2021, marking 18.2 per cent YoY growth vis-à-vis September 2020 and 29.6 per cent growth vis-à-vis the pre-pandemic month of September 2019. Sequentially, it has grown by 3 per cent over August 2021 reflecting a sustained growth in activity levels with ebbing of second wave. In terms of value, e-way bills generated reached ₹19.4-lakh crore in September 2021, 1.9 per cent higher than previous month, 22.8 per cent higher than August 2020, and 32.9 per cent higher than August 2019.
The report highlighted that GST collection is improving not just because of recovery but also because of increasing compliance. “Coupled with economic growth, anti-evasion activities, especially action against fake billers have also been contributing to the enhanced GST collections. The positive trend in revenues is expected to continue in the second half of the year,” the report said.
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