PHDCCI Quick Economic Trends for January 2021

No. PR- 189

January 11, 2021

New Delhi

PHDCCI Quick Economic Trends for January 2021

Economic recovery turns from steady to speedy path, Q3 FY 2020-21 growth seen at more than 0.1 percent: PHD Chamber

Increase in Exports, high E-way Bills, all-time high GST Collections, strong stock market and rising railway freight in December 2020 indicate speedy economic recovery in the coming months, however, employment creation needs more focus, says the industry body PHDCCI

Shri Sanjay Aggarwal, President, PHD Chamber of Commerce and Industry has expressed confidence in the on-going economic recovery and has appreciated the Government for pulling the economy from the low growth of (-)23.9% in Q1 FY 2020-21 to the overall growth of (-)7.7% in FY 2020-21 in the extremely difficult time of Pandemic COVID-19, in a press statement issued here today.

Out of the 10 indicators of QET (Quick Economic Trends) of economic and business activity tracked by the industry body PHDCCI, 9 have performed positive of which merchandise exports have shown a highest sequential growth of around 17% in December 2020 over the previous month.

On the back of various reforms undertaken by the Government in last 9 months, the expectations of a positive GDP growth at 0.1% to 2% in Q3 and 2% to 4% in Q4 FY 2020-21 are becoming strong with a higher growth trajectory in FY 2021-22 at more than 7.7%, said Shri Sanjay Aggarwal.

Going by the performance of 10 economic and business indicators of QET, the performance in December 2020 is better as compared to October and November 2020, as 9 out of 10 economic and business indicators have improved in December 2020 as against 8 in October 2020 and 6 in November 2020.

10 economic and business indicators of QET include demand and supply side indicators along with external sector and financial indicators, said Shri Sanjay Aggarwal.

Economic and business indicators such as GST Collections, E way bills, Railway Freight, Passenger Vehicle Sales, Forex Reserves, Exports, Stock Market, Merchandise Exports and Manufacturing PMI, have shown positive sequential growth in December 2020 as compared with November 2020, he said.

However, unemployment rate has recorded an increase to the level of 9% in December 2020 as compared to 6.5% in previous month of November 2020, said Sh Aggarwal

We believe that improvement in 9 economic and business indicators on sequential basis is a good indication that economy is moving in right direction and stronger economic recovery is expected in the coming month, said Shri Sanjay Aggarwal.

PHDCCI Quick Economic Trends : Growth Performance of Economic & Business activity so far

S. No. Economic and Business Indicators September 2020 October 2020 Growth (Sequential) November 2020 Growth (Sequential) December 2020 Growth (Sequential)
1 2 3 4 5 6 7 8 9
1 GST Collection (in Rs crore) 95480 105155 10.1% 104963 (-)0.2% 115174 9.7%
2 E way bill  (in Millions) 57.4 64.1 11.7% 55.3 (-)13.7% 64.1 15.9%
3 Unemployment Rate (in %) (Sign Changed)* 6.67 6.98 (-)4.6% 6.51 6.7% 9.06 (-)39.2%
4 Railway Freight (MT) 102 108 5.8% 110 1.6% 118.13 7.4%
5 Passenger  Vehicle Sales (units) 272027 310294 14.1% 264898 (-)14.6% 276412 4.3%
6 Forex Reserves (in US$ Billion) 499.9 518.3 3.7% 575.2 11.0% 581.1 1.0%
7 Exchange Rate (INR/USD) (Sign changed)* 73.56 74.55 (-)1.3% 73.99 0.8% 73.04 1.3%
8 Stock Market (SENSEX monthly average) 38379 40115 4.5% 43011 7.2% 46212 7.4%
9 Merchandise Exports (US$ Billion) 27 25 -7.4% 23 -8% 27 16.9%
10 Manufacturing PMI (points) 56.8 58.9 3.7% 56.3 (-)4.4% 56.4 0.2%
Overall growth performance of indicators of QET 8↑/10 6↑/10 9↑/10

Source : PHD Research Bureau, PHDCCI, compiled from various sources

Note : *Growth calculations of indicators such as exchange rate and unemployment are adjusted such that the decrease in the said indicators depicts improvement and vice-versa; figures are rounded off

The Reforms such as emergency credit line for MSMEs, liquidity scheme and partial credit guarantee scheme 2.0 for NBFCs, extension of the credit linked subsidy scheme (CLSS) scheme till March 2021, structural reforms in growth promising sectors including coal, minerals, defence, airports and aerospace management, power, space sector, atomic energy sector and civil aviation, six months moratorium on term loans, Production Linked Incentive Scheme for 10 champion sectors, income tax relief to developers and home buyers among others, have made recovery sooner than expected, said Shri Sanjay Aggarwal.

At this juncture, to continue the recovery momentum of economic and business activity, immediate policy attention is required towards credit access to industry and services sectors. Credit disbursement should be the top most priority at this juncture by the banking sector. The focus should be on ensuring provision of hassle free disbursements of loans vis-à-vis enhanced liquidity for MSMEs, especially in rural sectors, said Shri Sanjay Aggarwal.

Going ahead, demand creation will have a multiplier effect on enhanced production possibilities, expansion of employment in factories, expansion of capital investments and overall virtuous circle of growth and development of Indian economy. The increased spending on infrastructure will give a multiplier effect to rejuvenate the aggregate demand in the economy and to mitigate the daunting impact of COVID-19 on the economy. Undoubtedly, robust growth of infrastructure is the key ingredient to realize the vision of Aatmanirbhar Bharat. The Government can consider raising investment funding for the National Infrastructure Pipeline (NIP) through borrowings from overseas markets by issuance of overseas bonds through an SPV that could act as a mega Development Financial Institution- DFI, said Shri Sanjay Aggarwal.

Also, there is a need to lower interest rates for consumers and businesses, lesser compliances for MSMEs vis-à-vis ease of doing business at the ground level and a lower tax regime to increase the personal disposable income of the people, said Shri Sanjay Aggarwal.


Media Division

PHD Chamber of Commerce and Industry