If we were to gauge the health of the Indian economy through the lens of tax collections, there is little to no scope for finding a fault. Factor in the rise in consumer price index (CPI), more commonly known as inflation, and you will get a more realistic picture about the current state of affairs.
A bumper goods and services tax (GST) revenue shows how dependent the national exchequer is on indirect taxes. GST is a tax on consumption and any further rate increases may negatively impact consumption.
GST Collection August 2022
The gross GST revenue collected in the month of August 2022 was ₹1,43,612 crore. The revenues for the month of August 2022 are 28% higher than the GST revenues in the same month last year.
For six months in a row now, the monthly GST revenues have been more than the ₹1.4 lakh crore mark. The growth in GST revenue till August 2022 over the same period last year is 33%, continuing to display very high buoyancy.
Illegal Loan Apps
Union Minister for Finance & Corporate Affairs Smt. Nirmala Sitharaman expressed concern on increasing instances of illegal loan apps offering loans/micro credits, especially to vulnerable & low-income group people at high interest rates and processing/hidden charges, and predatory recovery practices involving blackmailing, criminal intimidation etc.
Smt. Sitharaman also noted the possibility of money laundering, tax evasions, breach/privacy of data, and misuse of unregulated payment aggregators, shell companies, defunct non-bank financial companies (NBFCs) etc. for perpetrating such actions.
India: World’s Fifth Largest Economy
India has become the world’s fifth-largest economy after it overtook the United Kingdom in end-March 2022, according to the latest calculations by Bloomberg. While this was anticipated for a while, Bloomberg reached this conclusion by using the IMF database and historic exchange rates.
“On an adjusted basis and using the dollar exchange rate on the last day of the relevant quarter, the size of the Indian economy in ‘nominal’ cash terms in the quarter through March was $854.7 billion. On the same basis, UK was $816 billion,” stated the Bloomberg report.
Inflation Nation
Managing inflation has become the number priority of the Reserve Bank of India (RBI). Excess liquidity is being withdrawn through monetary policy measures. Inflation for the month of August climbed upwards due to rise in prices of cereals and vegetables, while the sharpest rise was registered in the prices of spices.
On the other hand, prices of eggs, meat, and fish were down as compared to corresponding prices last year. Unprecedented increase in prices of clothing and footwear over the last 12 months is hurting household budgets across the income spectrum.
Automobile Sales August 2022
Auto Retail for the month of August saw an overall growth of 8%. August opens the door for festival season to kick in. When compared with August 2019, a pre-covid month, total vehicle retails fell by -7%. While passenger vehicles outperformed by growing 41%, commercial vehicles also turned positive by growing 6% and thus came out of the covid blues.
Manufacturing and Services
A sustained improvement in demand conditions boosted new order intakes at Indian manufacturers during August, which in turn pushed output growth to a nine-month high.
Production volumes were also supported by a pick-up in exports and upbeat projections for the year-ahead outlook. On the supply side, the results showed a further shortening of delivery times. International markets gave push to total sales, as seen by a marked and quicker increase in new export orders halfway through the second fiscal quarter.
Indian service providers welcomed a stronger expansion in new work intakes with a quicker upturn in business activity and the sharpest rise in employment for over 14 years.
Indian Stock Market
Equity markets have registered healthy gains in the past couple of months. After months of withdrawals, the FPI data was back in the green. Domestic investors, both retail and institutional, are consistently ploughing money in the securities market.
Indian securities markets have become an outlier in the world. Sustained domestic consumption and targeted policy measures are attracting capital from foreign and domestic investors alike.
Hope: Word Power
India cannot afford to be complacent about its demographic potential. We need more jobs and a push in spending from the government. There are evident signs for optimism and apparent blind spots in our economy.
The euphoria of buoyant tax collections should not overlook the idle sectors of the country. There are several external forces, over which we have little or no control, but this should not be used as an excuse by the policymakers. Hope is a powerful four-letter word, and it does not work in isolation. We need vision and execution to realise the expectations of a billion-plus people.