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  • Raghav Sand

IndEcon November 2021

There is no single statistic or metric that is capable to project the state of the economy. 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. Rising fuel prices and production disruption due to microchip shortage resulted in fewer cars being sold in the festive season.


Vegetable prices in the month of October were higher than expectations and played spoilsport during the festive season. Cooking oil prices were reduced voluntary by manufacturers, where as excise duty reduction on petroleum prices by the central government was welcomed by one and all. The steep reduction in central taxes on fuels prompted most state governments to follow suit.

Data Source: MoSPI (GoI)

Companies across various sectors have expressed concern over rising inflation. Hindustan Unilever and Nestle India have pointed towards profit-squeeze from higher input costs and supply chain strains, while Dabur India and Britannia Industries have already passed on some of the increased costs to consumers.

Reserve Bank of India (RBI) governor Shaktikanta Das believes that the recent decision of the central government to cut the excise duty on diesel and petrol augurs well for the inflation scenario. According to him, inflation in India is mainly caused due to the supply-side factors and these have been addressed by the government, particularly with reference to pulses and edible oils. This has helped contain the food inflation. However, core inflation has remained elevated, Das added.

Good and Services Tax

The gross GST revenue collected in the month of October 2021 was ₹1,30,127 crore. The total revenue of Centre and the States after regular settlements in the month of October 2021 was ₹51,171 crore for CGST and ₹52,815 crore for the SGST.

The revenues for the month of October 2021 are 24% higher than the GST revenues in the same month last year and 36% over 2019-20. During the month, revenues from import of goods was 39% higher and the revenues from domestic transaction (including import of services) were 19% higher than the revenues from these sources during the same month last year.

Data Source: GST Council

The GST revenues for October have been the second highest ever since introduction of GST, second only to that in April 2021, which related to year-end revenues. The revenues would have still been higher if the sales of cars and other products had not been affected on account of disruption in supply of semi-conductors.

Purchasing Managers’ Index

The recovery of the Indian service sector was extended to October, with companies indicating that a notable pick-up in new business led to the fastest expansion in output in over a decade. Elsewhere, the latest data continued to point to weak international demand for Indian services. New export business decreased in October, a trend that has been recorded since the COVID-19 outbreak. Despite being solid, the rate of contraction was the weakest since March.

Manufacturing sector growth in India gained steam in October as companies scaled up production in line with a substantial upturn in new work intakes. Firms stepped up input purchasing amid stock-building efforts and in anticipation of further improvements in demand, while business optimism hit a six-month high.

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