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  • Raghav Sand

Indecon: November 2020

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) shall be a monthly feature, where it will be our endeavour to decipher key economic developments and statistics from the past month/quarter.


Goods & Services Tax


The gross GST revenue collected in the month of October, 2020 was ₹1,05,155 crore of which CGST was ₹19,193 crore, SGST was ₹25,411 crore, IGST was ₹52,540 crore (including ₹23,375 crore collected on import of goods) and cess was ₹8,011 crore (including ₹932 crore collected on import of goods). The revenues for the month are 10% higher than the GST revenues in the same month last year.


During the month, revenues from import of goods was 9% higher and the revenues from domestic transaction (including import of services) are 11% higher that the revenues from these sources during the same month last year. The growth in GST revenue as compared to that in months of July, August and September, 2020 of -14%, -8% and 5% respectively clearly shows the trajectory of recovery of the economy and, correspondingly, of the revenues.

Chart Courtesy: PIB, Govt. of India

PMI: Key Industrial Indicator


India’s manufacturing PMI (Chart a) surged in a broad-based acceleration to its highest level in a decade at 58.9 in October. This growth is due to fresh orders and replenishing of inventories. The future output index rose to 64.3, its highest in the past 50 months. Manufacturing firms responding to the RBI’s industrial outlook survey expect that the upturn exhibited in Q2:2020-21 would strengthen in Q3 with improvements in production, capacity utilisation and order books.

Services were impacted most adversely in the early part of pandemic. The services PMI (Chart b) for October at 54.1 showed resurgence and finally came out of the contraction zone for the first time since the outbreak of COVID-19. Construction is witnessing green shoots as evident in rising steel consumption. Trading activity is above pre-COVID levels as reflected in GST collections and rising e-way bill volumes.


Transportation has been boosted by a 15.4 per cent jump in railway freight traffic across various categories of commodities. However, according to the Federation of Automobile Dealers Associations, sales of two-wheelers and passenger vehicles declined by 27 per cent and 9 per cent, respectively, in October 2020. The decline was sharper in the case of commercial vehicles and three-wheelers, which registered a contraction of 30 per cent and 65 per cent, respectively.

Net Foreign Portfolio Investment


Foreign portfolio investors turned net buyers during October as against net sales a month ago, bringing in $2.5 billion to the equity segment. India’s trade deficit narrowed to $8.78 billion in October 2020, compared to $11.76 billion in October 2019. Exports fell by 5.4% to $24.82 billion while imports declined by 11.56% to $33.6 billion, after a 19.6% decline in September.

Oil Outlook


Oil demand recovered swiftly in September, as data showed a drop of only 0.14 million barrels per day (mb/d) y-o-y compared with a decline of more than 0.7 mb/d in August, down 0.50 mb/d y-o-y for July. Easing of lockdown restrictions aided in recovery. Jet/kerosene remained in negative territory, dropping by around 0.1 mb/d y-o-y in September, indicating a struggle in the aviation sector, coupled with a reduction in kerosene demand in household usage in lieu of LPG, which posted an increase of 0.04 mb/d y-o-y.

Gasoline (Petrol) demand entered into positive territory for the first time since February – recording gains of 0.02 mb/d y-o-y, compared with a y-o-y decline of 0.05 mb/d in August – as more people chose to use private cars and two-wheelers to travel to and from work rather than using public transport.


Foreign Exchange


Improvement in underlying fundamentals such as a sharp narrowing of the trade deficit and recovery in portfolio flows buoyed market sentiment. In terms of the 36-currency trade-weighted real effective exchange rate, the Indian Rupee depreciated by 0.2 per cent in October from its level a month ago. India’s foreign exchange reserves rose to US $560.7 billion, equivalent of 16.4 months of imports.

Foreign Exchange Reserves and Import Cover

Work in Progress


Economic recovery is a process and will take its own time. The path and pace of recovery are key parameters to judge policy measures and entrepreneurial initiatives. It is essential that the government, financial institutions, corporates, and individuals are neither lethargic nor complacent in their thoughts or actions.


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