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  • Raghav Sand

IndEcon December 2021

Just like the pieces of a jigsaw puzzle, variables such as, tax collections, inflation, employment data, consumer spending etc., help to gauge the health of economy. In the past few months, inflation and supply chain strains have slowed down pace of economic recovery. Central banks across the world have hinted towards policy action much ahead of market expectations.

“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. 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 November 2021 was ₹1,31,526 crore. The government has settled ₹27,273 crore to CGST and ₹22,655 crore to SGST from IGST as regular settlement. For the second straight month gross GST collection crossed ₹1.30 lakh crore. The revenues for the month of November 2021 are 25% higher than the GST revenues in the same month last year and 27% over 2019-20. During the month, revenues from import of goods was 43% higher and the revenues from domestic transaction (including import of services) are 20% higher than the revenues from these sources during the same month last year.

Source: GST Council

The GST revenues for November 2021 have been the second highest ever since introduction of GST, second only to that in April 2021, which related to year-end revenues and higher than last month’s collection, which also included the impact of returns required to be filed quarterly.

Automobile Sector

Auto retail for the month of November continued to remain in negative zone despite Diwali as well as marriage season in the same month. The unwanted rains in southern states further spoiled the party.

While the 2W segment saw almost at par sales compared to last year (which itself was a bad year), overall sentiment remained low. Passenger vehicle continues to face the brunt of semi-conductor shortage. While the new launches are keeping customer’s interest high, it is only the lack of supply which is not allowing sales to conclude. The commercial vehicle segment continues to see traction. This aided by low base resulted in double digit growth. The bus segment is still witnessing a dry run as educational institutes continue to remain closed. With diesel prices at record highs, supply of CNG vehicles were not able to meet the demand. Tight liquidity and unavailability of finance for customers who availed moratorium are also acting as sales barrier.

Purchasing Managers’ Index

The Indian manufacturing sector continued to expand strongly in November, as an accelerated rise in sales supported the fastest upturn in production for nine months. Companies scaled up input buying, which in turn led to the second-quickest accumulation in stocks of purchases since data collection started nearly 17 years ago. Also, there were tentative signs of an improvement in hiring activity, following three successive months of job shedding. On the price front, the latest results showed that cost inflationary pressures remained intense amid transportation issues and difficulties among suppliers to source raw materials. Input prices increased at a rate that was broadly similar to October’s 92-month high.

PMI data for November indicated that the Indian service sector continued to strengthen, with a substantial upturn in new orders underpinning output growth. Although companies forecast higher business activity volumes over the course of the coming year, the expansion is expected to be restricted by price pressures.

Bonus Chart – Consumer Price Index

Data Source: MoSPI (GoI)

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