Corporate lobbyist Deepak Talwar said some high frequency economic indicators suggest that not only is the economy showing sequential improvement, it might actually have surpassed last years levels
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Indian economy is one of the hardest hit in the world. Based on the data available, over 40 million people could have lost employment. GDP Plunged by 23.9 percent in the first quarter of FY2020-21 reflecting the economic toll due to months-long lockdown.
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A seasoned economic analyst has said that the Indian economy, severely impacted during the lockdown period, could end up being better than projected because of a host of sequential improvements in key sectors.
Corporate lobbyist Deepak Talwar said some high frequency economic indicators suggest that not only is the economy showing sequential improvement, it might actually have surpassed last year's levels, albeit in some areas. "This is a very good sign for the world's second most populous nation. One should wait for the ongoing festive season to end before reaching any conclusions on the economy's growth prospects for the full year," said Talwar.
Deepak Talwar said that three economic indicators for October suggest that economic activity received a big boost last month. Goods and Services Tax collections crossed the psychological Rs 1 lakh crore mark for the first time since the imposition of a nationwide lockdown in the month of March. Purchasing Managers' Index (PMI) for manufacturing reached its highest ever value of 58.9 in October. This is the third consecutive month when PMI manufacturing has shown a sequential improvement and stayed above 50. "One must remember that a PMI greater than 50 signifies coming expansion in economic activity. The Finance Minister is open to the possibility of a second stimulus to the economy. There is some market expectation that as the economy has opened up more now, the government would be in a position to announce another round of stimulus."
He also said that the only long-term driver of sustained economic growth is demand. October and November could see a one-time boost in spending because of the festive demand. A good kharif harvest, which is already underway, could signal a sustained rural boost to demand in the economy. "The December round of RBI's Consumer Confidence Survey, which includes indicators on both essential and non-essential consumer spending, will offer a crucial insight on what is happening to consumer demand in the economy," Deepak Talwar added.
India's strategy of dealing with the Covid-19 crisis has paid off and the country's economy is set to bounce back. "The recent monetary policy assures that the government and the regulator will do everything it takes to keep the economy afloat. There has been a pick-up in e-way bill volumes, improvement in revenue earning freight traffic of major commodities, positive growth in exports and most significantly increase in the September GST collections to almost pre-Covid-19 level," he added.
India is the second worst-hit country in the world following the United States with around 8.5 million coronavirus cases. Despite a raging pandemic and an unprecedented economic contraction for two consecutive quarters, the economy of the nation is expected to bring traction in the light of the upcoming festive season and bumper agricultural produce.
Deepak Talwar is a corporate lobbyist and an entrepreneur who is well known for bringing a significant share of FDI in India.
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