Looking At India’s August Numbers Closely- GST, GDP Data And More

By BW CFO World Online Bureau 

In the medium term, export momentum could soften and a K-shaped recovery could be insufficient to drive domestic demand, which will need a growth cycle in employment and wages.

India witnessed a positive sign in the road to economic recovery as the Centre has said that it has collected a total Goods and Services Tax (GST) over Rs. 1 lakh Crore in August. Also, the automakers have sold more cars than in the year-earlier, amid the shortage of a semiconductor and parts.

Apart from the GST and automakers, demand for diesel and petrol have also gone up by 16 per cent and 14 per cent respectively. Meanwhile, electricity demand has increased to 18.6 per cent, which further indicates the greater movement of goods and people in August.

According to the National Payments Corporation of India data, Unified Payments Interface (UPI) transactions also witnessed a rise of 9.6 per cent to 3.55 billion from July. Hence, this also indicates bigger adoption and extra-economic activity which is expected to help the economy to grow. 

But, in July, factory activity moderated slightly with the manufacturing Purchasing Managers’ Index (PMI) decreased to 52.3 from 55.3.

Meanwhile, talking about the Gross Domestic Product (GDP) in India, it has increased to 20.1 per cent in the June quarter, according to the data

Sreejith Balasubramanian, Economist – Fund Management, IDFC AMC, speaking on the latest GDP data delved into the impact this could have, “Nominal GDP for the June quarter, which witnessed the second wave of Covid infections, grew 31.7 %y/y while real GDP grew 20.1%. Driven by base effect, as this actually represents a higher-than-usual q/q fall, the reading was slightly below consensus and also reflects a high GDP deflator. Real core GVA (excluding agri and public admin) was down 12.8% q/q. However, more recently, mobility indicators, power demand and GST e-way bills generated have recovered quite well, while exports continue to be buoyant. Support from rural, particularly agriculture, needs to be monitored given the fluctuations in monsoon rainfall and its impact on reservoir levels and crop harvest. In the medium term, export momentum could soften and a K-shaped recovery could be insufficient to drive domestic demand, which will need a growth cycle in employment and wages.”