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  • Raghav Sand

IndEcon August 2021

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, Gross Domestic Product, and 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 July 2021 was ₹1,16,393 crore of which CGST was ₹22,197 crore, SGST was ₹28,541 crore, IGST was ₹57,864 crore (including ₹27,900 crore collected on import of goods) and Cess was ₹7,790 crore (including ₹ 815 crore collected on import of goods).

The revenue for the month of July 2021 is 33% higher than the GST revenues in the same month last year. During the month, revenues from import of goods was 36% higher and the revenues from domestic transaction (including import of services) were 32% higher than the revenues from these sources during the same month last year.

Source: Ministry of Finance, GoI

GST collection, after posting above ₹1 lakh crore mark for eight months in a row, dropped below ₹1 lakh crore in June 2021 as the collections during the month of June 2021 predominantly related to the month of May 2021. During May 2021, most of the States/UTs were under either complete or partial lock down due to COVID. With the easing out of COVID restrictions, GST collection for July 2021 has again crossed ₹1 lakh crore, which clearly indicates that the economy is recovering at a fast pace.

Automobile Sales

With entire country now open, July witnessed robust recovery in automobile sales as demand across all categories remain high. The low base effect also continues to play its part. With all categories in green for the month, passenger vehicles witnessed high demand especially with buzz around new launches and compact SUV segments. The 2-wheeler segment though continues to see positive demand YoY, the rate of recovery remains sluggish as customers at the bottom of the pyramid suffer with poor disposable income and rural markets where Covid-19 cases were high during the 2nd wave.

Source: Federation Of Automobile Dealers Associations

On the other hand, the global semi-conductor shortage is now becoming a deep-rooted problem for the passenger vehicles segment which is now above the pre-pandemic mark. The average inventory for passenger vehicles and two-wheelers ranges from 30-35 days and 20-25 days, respectively.

Foreign Portfolio Investment

Foreign Portfolio Investors (FPIs) were net sellers in the equity segment in three of the last four months. Benchmark indices have continued their upward movement while domestic investors and mutual funds have consolidated holdings. The omnipresent liquidity in the primary and secondary market is a sign of sustained investment appetite.

Source: NSDL and NSE of India Ltd.

Investors’ exuberance can be gauged from the recent IPOs, especially in the information and technology sector. A good monsoon and return of normalcy in trade and commerce are vital for the economy before the onset of festive and marriage season.


During the month of July 2021, National Statistical Office (NSO) collected prices from 99.5% villages and 97.8% urban markets while the market-wise prices reported therein were 85.8% for rural and 89.7% for urban. Vegetables prices and transportation costs rose last month due to high cost of fuel.

Meat and fish prices were under pressure due to supply constraints. Price of pulses and oils & fats registered correction, while footwear became expensive across the country. Urban housing witnessed marginal improvement as more and more offices and factories reopened after the waning of second wave of Covid-19.

Source: MoSPI & NSO

Purchasing Managers’ Index

Operating conditions in India improved during July, after growth was halted by the escalation of the pandemic in June. Output, new orders, exports, quantity of purchases and input stocks all returned to expansion territory, while a marginal increase in employment ended a 15-month sequence of job shedding. Manufacturing PMI moved back above the critical 50.0 threshold in July. The headline figure was up from 48.1 to 55.3, pointing to the strongest rate of growth in three months.

Looking ahead, service firms are pessimistic about the 12-month outlook for output for the first time in a year. The latest data also pointed to an intensification of inflationary pressures across the sector. Posting 45.4 in July, the Services PMI was in contraction territory for the third month in a row.

Transport & Storage was the only sub-sector to register growth of business activity and sales. In line with sustained falls in new work, there was a further reduction in service sector jobs during July. Employment contracted for the eighth consecutive month, albeit at a moderate pace that was slower than that seen in June.

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