Braving the unprecedented global health crisis, the Indian economy has shown a remarkable resilience in the last few months. Lead indicators such as manufacturing PMI, exports, rail freight and energy consumption are returning to a clear growth trajectory with firm signals of further improvement, a latest ASSOCHAM Assessment on State of Economy (AASE) pointed out.
"Be it India's Purchasing Managers' Index (PMI - Manufacturing) or PMI for Services, robust recovery is visible. The PMI for Manufacturing expanded to 56.8 in September 2020, the highest since January 2012. The PMI for Services expanded for the fifth straight month in September to 49.8 from 41.8 in August. In other words, according to the outlook measured by the best-tracked global gauge, about 57 per cent of purchase managers for manufacturing and about 50 per cent for services expect the two vital pillars of the economy to expand," AASE noted.
Agriculture, the third and the most crucial pillar of the economy, had kept the banner high, ensuring that the country had enough food security to feed its 1.3 billion people. The latest trade data shows how rice exports jumped by a massive 92 per cent in September. "We not only ensured food security for ourselves but are also emerging as major food suppliers to the world. A similar trend in exports of drugs and pharmaceuticals was observed, with the sector showing over 24 per cent growth in September exports."
Likewise, the chamber's assessment pointed towards a further pick up in the coming months.
"As a nation, we are giving a solid fight to Covid-19 pandemic. With the unlocking of the economy almost complete, people are returning to work, wearing masks and maintaining social distancing. However, a continuous campaign by the Centre, states and the local Governments would be required to reinforce these habits further," ASSOCHAM secretary general, Deepak Sood said.
He also stated that undaunted by the health emergency, the Government under the leadership of Prime Minister Narendra Modi, has pressed the accelerator for reforms in labour laws, agriculture, defence production and incentives to domestic manufacturing.
Collection for the Goods and Services Tax (GST) at Rs 95,500 crore for September showed year-on-year improvement of four per cent, reversing from a negative trend for the previous six months. As more and more services reopen and the consumers learn more about dealing with the pandemic, the GST collections are expected to pick up further.
The rail freight, yet another critical indicator, showed a 15 per cent growth YoY in September. Similarly, annualised power consumption was up 4.6 per cent for the month at 113.5 billion units. Exports too have returned to the positive territory, logging in 5.27 per cent annualised growth at USD 27.4 billion for September.
"As we have been pointing out, there would be a marked improvement in the third and fourth quarter. With the festival season kicking in, the consumer spending has started showing positive signals. A cautious optimism should soon replace the entire cash conservation mind-set," Sood said, adding once the vaccine is in place, the optimism would be pronounced.
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