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  • Raghav Sand

Indian Economy (IndEcon) June 2022

Capitalism is the longest running experiment of the past few centuries. Its degree of volatility and autocorrect mechanism pinch the have-nots more than the haves. In the past few weeks, central bankers across the world have increased key policy rates to check inflation. Numbers can be presented in various ways, and policy makers almost always cherry-pick them. Foreign Portfolio Investment (FPI) has seen unprecedented outflows in the past six months.

Markets are overreacting to slightest of negative news. Whether you are commoner or a corporate, the current economic situation has brought you to the drawing board.

Governments have shrugged off responsibility by blaming external pressures. Stimulus and subsidy bills have put strain on the fiscal health of all major economies. IndEcon (India plus economy) is a monthly feature, where it is our Endeavour to Decipher® key developments in the Indian economy during the past month/quarter.

GST Collection April 2022

The gross GST revenue collected in the month of May 2022 was ₹1,40,885 crore of which CGST is ₹25,036 crore, SGST is ₹32,001 crore, IGST is ₹73,345 crore (including ₹37,469 crore collected on import of goods) and cess is ₹10,502 crore (including ₹931 crore collected on import of goods).

GST collection: Oct 2021 to Apr 2022 Chart: The Know-How Journal; Data: GoI

Centre also released GST compensation of ₹86,912 crores to States and UTs on 31 May, 2022. The revenues for the month of May 2022 were 44% higher than the GST revenues in the same month last year.

Automobile Sales

In the month of May 2022, the Indian auto industry continued to register lukewarm numbers. Though, in comparison to last year, every segment registered growth. While passenger vehicles and tractors continued their positive run by growing 11% and 33%, 2-wheeler, 3-wheeler, and commercial vehicle are yet to show any signs of healthy growth in sales.

Auto Sales May 2022
Data: Federation of Automobile Dealers Associations of India

Central and a few state governments finally decided to lower excise duty on fuel. This move gave some relief to the consumers and helped to reduce inflation. Electric Vehicle (EV) sales were growing rapidly but various fire incidents across almost all EV brands have created a sense of fear in the mind of the customer. Buses are showing good demand due to re-opening of educational institutions.

Inflation Nation

The Monetary Policy Committee (MPC) of the Reserve Bank of India (RBI) tried to cover up for its past inactions by raising rates. Consumer Price Index (CPI) climbed down in the month of May but it still above the upper tolerance limit set by the RBI. Price of food items, footwear, transport, and communication rose sharpest as compared to the data from last year.

Inflation May 2022
Data: MoSPI, Govt. of India

As per internal deliberations of the RBI, inflation is set to remain above the six percent mark till the end of calendar year. Government has surplus stock of food grains, and must use it judiciously in the coming months.

Indian Stock Market

Equity markets are witnessing heightened volatility in the past few months. The current market sentiment is bearish due to several factors. Government securities’ yields are at record highs. FPIs have been net sellers since October 2021; they have a negative net investment of ₹2,05,676 crore in the equity segment in the past eight months. As a result, the wealth of domestic investors has eroded substantially in the past half year.

NSE and FPI May 2022
Data: NSDL and NSE Limited

Simple Things

Economists and central bankers rely heavily on the trial-and-error approach. Until they get it right, common folks are taken on a roller-coaster ride. For a change, why not try to do the simple things right for a while, rather than failing at extravagant pursuits! The level of confidence statisticians show with approximations is baffling. If they really know so much about the economy, why are there no billionaire economists? It is fairly easy to analyse an event which has already occurred, while even after years of practice, it is difficult to predict the future.

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