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  • Raghav Sand

Indecon April 2021

The Indian Economy is giving mixed signals with increased direct and indirect taxes collections on one hand, and on the other hand, subdued demand for various non-essential items is dragging the market sentiment down. In an interconnected world, a piece of good or bad news can sway emotions and near-term outlook of fund managers. Tax receipts, stock market indices, foreign portfolio investment (FPI), automobile sales and inflation are some of the key factors that help in gauging the health of an economy.


Goods and Services Tax


The gross GST revenue collected in the month of March 2021 is at a record of ₹1,23,902 crore of which CGST is ₹22,973 crore, SGST is ₹29,329 crore, IGST is ₹62,842 crore (including ₹31,097 crore collected on import of goods) and Cess is ₹8,757 crore (including ₹935 crore collected on import of goods). Centre has also released a compensation of ₹30,000 crore during the month of March 2021.


The GST revenues during March 2021 are the highest since introduction of GST. In line with the trend of recovery in the GST revenues over past five months, the revenues for the month of March 2021 are 27% higher than the GST revenues in the same month last year.

Data: Ministry of Finance

During the month, revenues from import of goods was 70% higher and the revenues from domestic transaction (including import of services) are 17% higher than the revenues from these sources during the same month last year. The GST revenue witnessed year on year (YoY) growth rate of (-) 41%, (-) 8%, 8% and 14% in the first, second, third and fourth quarters of last financial year, respectively.


Stock Market and FPI


The Bombay Stock Exchange’s benchmark index has consistently shown an upward trend in the last twelve months. Some commentators have argued that the sentiments on mint street are not in sync with that on the main street. FPI’s were net buyers for a sixth consecutive month; they withdrew funds from the debt segment for a third month in succession. At close financial year, Sensex gained 410 points since end of February.

Data: Bombay Stock Exchange

In the coming months stock markets may go either way, while a correction seems more likely. Rising number of COVID-19 cases may hit both consumption and production in the first quarter of the new financial year; the flight of foreign capital cannot be completely ruled out.

Automobile Sector


March Auto Registrations continue to fall by -28.64% YoY but grew 10.05% month on month (MoM). Tractors and Passenger Vehicles (PV) sustained its healthy momentum by growing 29.21% and 28.39% YoY on a low base, transition from BS-4 to BS-6 and India going under lockdown last year. On YoY basis, 2-wheelers (2W), 3-wheelers (3W) and commercial vehicle (CV) unrelentingly fell by -35.26%, -50.72% and -42.20% respectively.


PV waiting period continued to hold its ground and remained as high as seven months as scarcity of semiconductors remained put. 47% PV dealers said that they lost more than 20% sales due to supply side constraints. The second wave of Covid is not only spreading faster but is also destabilizing the growth which India has been able to achieve in last few months.

According to Pew Research, financial woes brought by Covid-19 have pushed about 3.2 crores (32 million) Indians out of the middle class, undoing years of economic gains. This had its impact on 2-wheelers as it saw one of its steepest de-growth in last few months. This coupled with high fuel prices and price increase acted as double whammy. It not only created a havoc in entry level customers mind but also kept them away from visiting showrooms.


Purchasing Managers Index – Manufacturing and Services


The seasonally adjusted India Manufacturing Purchasing Managers’ Index (PMI) fell from 57.5 in February to a seven-month low of 55.4 in March. However, the latest reading was indicative of a substantial improvement in the health of the sector that outpaced the long-run series average. Goods producers indicated that strengthening demand and the receipt of orders in bulk underpinned a further rise in overall sales.


The upturn was the eighth in successive months and sharp, despite softening to a seven-month low. Employment declined in March, taking the current sequence of job shedding to a year. The rate of contraction was modest, but the quickest since September 2020. Business confidence waned in March.

March data pointed to further increases in new business and output at Indian services firms, as companies benefited from strong demand conditions and the elections. However, despite being marked, rates of expansion softened in both cases. At 54.6 in March, the seasonally adjusted India Services Business Activity Index indicated growth for the sixth consecutive month.


Falling from 55.3 in February, the latest reading was consistent with a slower but still marked pace of expansion. The rate of input cost inflation across the private sector was only a tick lower than February’s 88-month high, indicating another sharp increase in firms’ expenses.


Bonus Chart – Inflation

Data: Ministry of Statistics and Programme Implementation

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