The Indian economy is on track for a strong rebound. High frequency data on Purchasing Managers’ Index (PMI) for manufacturing, and Goods and Services Tax (GST) collections for October are two signs that the Indian economy is turning around.
PMI for manufacturing for October stood at 55.9, the highest since February 2021, while GST collections were Rs 1.3 lakh crore in the same month, the second highest since the indirect tax was rolled out in 2017.
Here are five signs that show the economy is on a strong recovery path:
PMI manufacturing for October rose to 55.9 from 53.7 in September. An index reading of 50 and above indicates expansion in economic activity, and below 50 points at contraction. PMI manufacturing increased for three consecutive months, with October clocking the highest value since February, when it was at 57.5.
“Amid reports of improved market confidence, rising requirements among clients and successful marketing, new orders continued to expand in October. The upturn was sharp and the fastest in seven months,” IHS-Markit, the agency which conducts PMI surveys, said. Factory output was the strongest since March.
GST collection in October was at Rs 1.3 lakh crore, the second highest since the indirect tax was implemented. The highest revenue was collected in April 2021 at Rs 1.41 lakh crore. Revenue collections for October were 36 percent higher than the same month last fiscal.
“This is very much in line with the trend in economic recovery,” the finance ministry said on November 1.
October’s GST collections reflect a pick-up in the overall fiscal situation in September. Both revenue collections and Centre’s spending picked up in the previous month.
Another strong indicator of recovery was the growth in merchandise exports, which grew 42.33 percent to $35.47 billion in October 2021. In October 2020, exports stood at $24.92 billion.
Also read: Editor’s take: October trade data a mixed bag with higher exports, imports, trade deficit
Stock market rally
The Indian equity market has rallied in the last 19 months, becoming one of the best performing stock markets in the world this year.
According to an index compiled by Bloomberg, India’s market capitalisation surged 37 percent this year till October to $3.46 trillion. Key index Sensex soared more than 130 percent since its trough in March 2020.
The market rally has given investors a feeling of being richer, giving them more confidence about their investments.
The country’s power consumption was up 4.8 percent in October at 114.37 billion units (BU), according to power ministry data. In October 2020, power consumption was at 109.17 BU.
Experts believe recovery in demand and consumption of power is a sign of improvement in economic activities following the easing of COVID-19 restrictions.
Apart from these data-driven indicators, growth in economic activity can be seen through anecdotal evidence such as rise in business at airports, hotels, tourist locations, and rising consumer activities.
(Edited by : Shoma Bhattacharjee)