Economic recovery gains momentum in July 2021: PHD Chamber

No. PR- 072

August 3, 2021

New Delhi

PHDCCI Economy GPS Index July 2021

Economic recovery gains momentum in July 2021: PHD Chamber

Economic recovery has once again gained momentum as the lead economic and business indicators have shown further improvement in July 2021. The PHDCCI Economy GPS index has therefore increased to 120.2 for July 2021 as compared to 107.1 for June 2021 (Base year 2018-19 = 100), said Sanjay Aggarwal, President, PHD Chamber of Commerce and Industry, in a press statement issued here today.

Sequential growth of passenger vehicles increased by 16% in July 2021 from 2, 31,633 units in June 2021 to 2, 68,685 units in July 2021. The sequential growth of GST collections increased by 25.4% from Rs. 92,849 crore in June 2021 to Rs. 1,16,393 crore in July 2021. The sequential growth of average of daily close of SENSEX also rose by 0.6% from 52399.7 in June 2021 to 52694.3 in July 2021.

Economic recovery so far (Sequential)

 

PHDCCI Economy GPS Index 2018-19=100 January 2021 February 2021 March 2021 April 2021 May 2021 June 2021 July 2021
121.7 122.0 122.9 124.3 91.5 107.5 120.2

Source: PHD Research Bureau, PHDCCI Economy GPS Index

The PHDCCI Economy GPS Index during the period April–July of  FY 2021-22 stands at 110.8 as compared to 62.6 for April–July  FY 2020-2021, said Sanjay Aggarwal.

PHDCCI Economy GPS Index at 120.2 for July 2021 is higher by 34.6 points from the Economy GPS Index for July 2020 at 85.6, said Sanjay Aggarwal.

Economic recovery so far (Y-o-Y)

 

PHDCCI Economy GPS Index 2018-19=100 July 2017 July 2018 July 2019 July 2020 July 2021
72.3 100.9 94.3 85.6 120.2

Source: PHD Research Bureau, PHDCCI Economy GPS Index

On the back of declining new Coronavirus cases, continued unlocking in various parts of the country and calibrated economic reforms announced by the Government, the economy is recovering at a fast pace from the recent lows of April and May 2021, said Sanjay Aggarwal.

PHDCCI Economy GPS Index has shown sharp recovery from the lows of 39.6  for April 2020 to 124.3 for April 2021, 91.5 for May 2021 as compared with 50.1 for May 2020, 107.5 for June 2021 as compared with 75.1 for June 2020 and 120.2 for July 2021 as compared with 85.6 for July 2020. There is a strong correlation between the GDP and GPS at the rate of 0.7, as depicted in the Chart 2 below.

Chart 1: GPS Index: Monthly Trend   Chart 2: Movement of GDP and GPS over the quarters

Source: PHD Research Bureau, PHDCCI Economy GPS Index

At this juncture, there is a need to further fuel the drivers of household consumption and private investments to enhance the aggregate demand in the economy as it will have an accelerated effect on expansion of capital investments in the country, said Sanjay Aggarwal.

The Government should frontload the National Infra Pipeline expenditure as increased spending on infrastructure will give a multiplier effect to rejuvenate the aggregate demand in the economy. Undoubtedly, robust growth of infrastructure is the key ingredient to realize the vision of Aatmanirbhar Bharat, said Sanjay Aggarwal.

More and more direct benefit transfers needs to be considered for the urban and rural poor under the various welfare schemes in addition to the free distribution of dry rations till Diwali as already announced by the Hon’ble Prime Minister, he said.

Vaccination of population should be continued with a more faster pace, let’s target to vaccinate at least half of the population by end September 2021, said Sanjay Aggarwal.

PHD Chamber of Commerce and Industry (PHDCCI) Economy GPS Index is a composite index of 3 lead economic and business indicators with base year at 2018-19=100, which measures the broad economic and business activity. The PHDCCI Economy GPS Index, based on the monthly values of three high frequency indicators viz., GST collection (Rs. Crore), Passenger Vehicle Sales (units) and SENSEX (daily average), helps to find the direction of the economy.  The three broad indicators are representing not only demand and supply in the economy but also revenue growth of the government and movement of financial markets in the country. GST collections indicate the momentum of business activity, passenger vehicle sales is broad indicator of demand activity in the economy and movement of SENSEX indicate mood of both domestic and foreign investors.

Movement of Economy GPS over the months

Month- Year Economy GPS Index
Jul-17 72.3
Aug-17 96.8
Sep-17 98.2
Oct-17 94.9
Nov-17 92.0
Dec-17 88.0
Jan-18 96.7
Feb-18 93.6
Mar-18 97.8
Apr-18 102.1
May-18 100.1
Jun-18 97.7
Jul-18 100.9
Aug-18 101.2
Sep-18 101.4
Oct-18 99.8
Nov-18 97.4
Dec-18 93.7
Jan-19 101.4
Feb-19 98.8
Mar-19 105.6
Apr-19 104.0
May-19 98.1
Jun-19 97.3
Jul-19 94.3
Aug-19 91.0
Sep-19 92.4
Oct-19 102.0
Nov-19 103.9
Dec-19 101.0
Jan-20 107.1
Feb-20 103.2
Mar-20 80.0
Apr-20 39.6
May-20 50.1
Jun-20 75.1
Jul-20 85.6
Aug-20 90.5
Sep-20 100.2
Oct-20 109.6
Nov-20 106.9
Dec-20 114.8
Jan-21 121.7
Feb-21 122.0
Mar-21 122.9
Apr-21 124.3
May-21 91.5
June-21 107.5
July-21 120.2

Source: PHD Research Bureau, PHD Chamber

 

End

Media Division

PHD Chamber of Commerce and Industry