“In God we trust. All others must bring data.” This quote, made by W. Edwards Deming, refers mainly to the importance of data measurement and analysis when doing business. Data is one the most reliable indicators of progress. When the actual figures are available, we have little scope for approximation. Future projections are made for different scenarios with varied degree of confidence.
Governments, corporates, and individuals base their decisions upon reports of tax collection, employment data, Purchasing Managers’ Index (PMI) etc. IndEcon (India plus economy) is a monthly feature, where it is our endeavour to decipher key economic developments and statistics from the past month/quarter.
Goods and Services Tax
The gross GST revenue collected in the month of August 2021 was ₹1,12,020. The government settled ₹23,043 crore to CGST and ₹19,139 crore to SGST from IGST as regular settlement. In addition, Centre also settled ₹24,000 crore as IGST ad-hoc settlement in the ratio of 50:50 between Centre and States/UTs.
The revenues for the month of August 2021 are 30% higher than the GST revenues in the same month last year. During August, the revenues from domestic transaction (including import of services) were 27% higher than the revenues from these sources during the same month last year. Even as compared to the August revenues in 2019-20 of ₹98,202 crore, this is a growth of 14%.
GST collection, after posting above ₹1 lakh crore mark for nine months in a row, dropped below ₹1 lakh crore in June 2021 due to the second wave of Covid-19. With the easing out of restrictions, GST collection for July and August 2021 have again crossed ₹1 lakh crore, which clearly indicates that the economy is recovering at a fast pace. Coupled with economic growth, anti-evasion activities, especially action against fake billers have also contributed to the enhanced GST collections.
Automobile Sales
Auto Dealers are facing the most challenging phase as Covid-19 after-effect continues to play spoil-sport. While until last year, when demand was a challenge, supply is becoming a bigger problem currently due to shortage of semi-conductors, even though there is high demand for passenger vehicles.
The 2-wheeler market is highly price sensitive. With multiple price hikes, increased fuel cost coupled with educational institutions remaining closed, the impact could be felt on the overall segment.
Customers continue to fight financial battle due to Covid related health issues and hence remained away from dealerships, resulting in low enquiry and lower sales. This has its impact on the entry level segment which continues to face the biggest brunt. Commercial vehicle segment continues to witness some recovery coming back majorly due to low base of last year.
Purchasing Managers’ Index
Growth of manufacturing production in India was curbed in August by the pandemic and rising input costs. A softer upturn in sales led companies to pause their hiring efforts, with business confidence dampened by concerns surrounding the damaging impact of COVID-19 on demand and firms’ finances.
Registering 52.3 in August, the seasonally adjusted Manufacturing Purchasing Managers’ Index pointed to an improvement in overall operating conditions for the second straight month. That said, the headline figure was down from 55.3 in July, indicating a softer rate of growth.
Manufactures passed part of the additional cost burden on to clients by lifting their fees. Employment levels were broadly stagnant in August as companies reportedly had sufficient workforces to cope with current requirements and confidence remained subdued. Although output was predicted to increase in the year ahead, the overall degree of optimism weakened from July.
At 56.7 in August, up from 45.4 in July, the seasonally adjusted India Services Business Activity Index was above the 50.0 neutral threshold for the first time in four months. The latest reading pointed to a marked rate of expansion that was the fastest in one-and-a-half years. Moreover, the pace of expansion was marked and the quickest in over eight-and-a-half years. Services firms outperformed manufacturers for the first time in over three years.
Bonus – Inflation Chart
