“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 December 2021 was ₹1,29,780 crore of which CGST was ₹22,578 crore, and SGST was ₹28,658 crore. IGST was ₹69,155 crore (including ₹37,527 crore collected on import of goods) and cess is ₹9,389 crore (including ₹614 crore collected on import of goods).
The revenues for the month of December 2021 was 13% higher than the GST revenues in the same month last year and 26% higher than the GST revenues in December 2019. The average monthly gross GST collection for the third quarter of the current year has been ₹1.30 lakh crore against the average monthly collection of ₹1.10 lakh crore and ₹1.15 lakh crore in the first and second quarters, respectively.
Automobile Sales
The month of December is usually seen as a high sales month where Original Equipment Manufacturers (OEMs) continue to offer best discounts to clear the inventory due to change of model year. It was however not the case this time around as retail sales continued to disappoint thus wrapping up an underperforming calendar year. Annual growth rate of three-wheeler sales was high on account of low base effect.
With semi-conductor shortage continuing to play spoil-sport, passenger vehicle (PV) sales in spite of huge bookings in December closed in red. Dealers however reported slight ease in vehicle supply, thus giving some hope of improvement. The two-wheeler segment however was on a different trajectory when compared to PV. High cost of ownership, bad rural sentiment, work from home and the latest threat of omicron continued to impact sales.
Commercial Vehicle segment continues to rise. The government’s push for infrastructure spending – especially road infrastructure, better freight rates, and price hike announcement in January helped the overall segment close in positive double digits.
Foreign Portfolio Investment
Last year, net FPI investment in India was ₹50,090 crore. Investment in debt instruments was more as compared to equity segment. NIFTY-50 clocked an annual rise of 27.28% in the twelve months of 2021. Domestic mutual funds showed confidence in the market and stepped up their buying. The markets have huge expectations from the budget and industry friendly policies are the need of the hour.
That said, Government cannot overlook the fiscal math to please the market. Nation-wide vaccination drive and thrust to infrastructure projects leave little room for reducing corporate tax rates. Individual taxpayers can expect marginal reduction in tax liability for the next assessment year.
Purchasing Managers Index
The health of the Indian manufacturing industry improved further in December, with growth of new work and production remaining sharp in spite of losing momentum. Business confidence strengthened, but sentiment was again dampened by concerns surrounding supply-chain disruptions, COVID-19 and inflationary pressures.
Indian manufacturers reported another monthly increase in overall cost burdens. International demand for Indian goods continued to improve in December. New export orders rose for the sixth month in succession, albeit only slightly. Indian services companies continued to report growth of sales and business activity last month. Data suggested that the latest increase in new orders was came from domestic market, as new business from abroad declined.
Commerce and Industry Minister, Piyush Goyal has said that India is going to achieve $650 billion exports target for financial year 2021-22. The share of merchandise exports is expected to be $400 billion, while the rest will be service exports. Goyal’s ministry has urged the industry to make the most of export promotion initiatives and schemes.
Inflation
Rural inflation outpaced the rise in prices registered in urban areas. Inflation is regarded as taxation without legislation. Prices of vegetables and fuel eased last month, while clothing and footwear registered sharp increase throughout the country. Price of egg, an affordable source of protein, continued its ascent and will need policy intervention in the coming months.