Economic recovery resumes, May 2021 economic activity better than April 2021: PHD Chamber

No. PR- 059

June 14, 2021

New Delhi

 

PHDCCI Quick Economic Trends for May 2021

 

Economic recovery resumes, May 2021 economic activity better than April 2021: PHD Chamber

 

Trade and  industry have been witnessing uncertain economic environment with depressed demand, disrupted supply chain, rising commodity prices and squeezed working capital due to the daunting impact of second wave of Coronavirus. However, a few lead economic indicators have shown an uptick in May 2021 as compared with April 2021, said Sanjay Aggarwal, President, PHD Chamber of Commerce and Industry, in a press statement issued here today.

 

Out of the 10 lead economic and business indicators of QET (Quick Economic Trends), tracked by the industry body PHDCCI, 5 have shown uptrend in the sequential growth for the month of May 2021 as compared with 3 showing the uptrend in April 2021, said Sanjay Aggarwal

 

Railway freight, exports, forex reserves, exchange rate and stock market have shown sequential growth in May 2021 as compared with April 2021, said Sanjay Aggarwal.

 

Exports have shown a growth of 5.2% in May 2021 over the previous month of April 2021, followed by railway freight with growth of 3%, stock market with growth of 1.9%, exchange rate with growth of 1.8% and forex reserves with growth of 1.7% for May 2021 over April 2021, said Sanjay Aggarwal.

 

However, 5 indicators including GST collections, e-way bills, passenger vehicle sales, unemployment rate and manufacturing PMI registered a decline in May 2021 over April 2021, said Sanjay Aggarwal.

 

Passenger vehicle sales recorded a contraction of (-)66.3% and decreased from 2,61,633 units in April 2021 to 88,045 units in May 2021. The unemployment rate in the country rose from 7.97% in April 2021 to 11.9% in May 2021, said Sanjay Aggarwal.

           

The second wave of Covid-19 has drastically impacted the country as compared to the first wave in 2020 with record active cases, daily new cases and deaths, said Sanjay Aggarwal.

 

MSMEs are facing the challenges of rising input costs and squeezed working capital, while on the other hand, households are diverting their spending on medical needs and deferring their non-essential purchases, said Sanjay Aggarwal.

 

The significant pick up in the economic activity was observed from October 2020 which peaked in January 2021 and started declining from February 2021, while slightly improving in May 2021, as depicted in the Chart-1, said Sanjay Aggarwal.

 

  Chart 1: Economy out of 10 based on PHDCCI Quick Economic Trends Chart 2: Economic and Business indicators’ growth rates: May 2021 (in %)
 

Source: PHD Research Bureau, PHDCCI

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; growth is calculated sequentially, ie. month over month for all the indicators.

 

At this juncture, to re-build for the high growth trajectory, the Government has to frontload the National Infra Pipeline expenditure as private investment are not coming, said Sanjay Aggarwal.

 

Government/ PSU payments must not be delayed due to Work From Home issues or shortage of funds, said Sanjay Aggarwal.

 

Do away with the custom duties on the imports of primary raw materials for industrial use for at least current FY 2022 and impose export duties on various primary commodities  showing huge price increases, exceeding 50% over the last FY 2021, Sanjay Aggarwal.

 

More and more direct transfer benefits to be considered for the urban and rural poor under the various welfare schemes, he said

 

At least 75% of the population of country needed to be vaccinated with both doses of vaccination by December 2021 to do away with the uncertainty in the economy, Aggarwal.

 

A substantial stimulus to create effective strides for futuristic growth trajectory and to diminish the daunting impact of the second wave of the pandemic coronavirus on trade and industry would be crucial to support the economic momentum in this extremely difficult time, said Sanjay Aggarwal

 

If the Government undertakes the effective steps and provides a substantial stimulus to combat the impact of coronavirus, a double-digit growth rate of more than 10% in FY2022 will be achievable as anticipated earlier by various forecasting organizations along with GOI and RBI before the 2nd wave of pandemic coronavirus, Sanjay Aggarwal.   

 

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

 

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

S. No. Economic and Business Indicators Mar-21 Growth Apr-21 Growth May-21 Growth
         
1 GST Collection (in Rs crore) 123902 9.5% 141384 14.1% 102709 -27.4%
2 E way bill  (in Millions) 71.2 11.6% 58.76 -17.5% 39.98 -32.0%
3 Railway Freight (MT) 130.4 16.2% 111.47 -14.5% 114.8 3.0%
4 Exports (US$ Billion) 34 22.9% 30.63 -9.9% 32.21 5.2%
5 Passenger  Vehicle Sales (units) 290939 3.4% 261633 -10.1% 88045 -66.3%
6 Unemployment Rate (in %) (Sign Changed)* 6.5 5.7% 7.97 -22.6% 11.9 -49.3%
7 Forex Reserves (in US$ Billion) 579.3 -0.9% 588 1.5% 598 1.7%
8 Exchange Rate (INR/USD) (Sign changed)* 72.8 -0.03% 74.53 -2.4% 73.2 1.8%
9 Stock Market (SENSEX monthly average) 50100 -1.3% 48878 -2.4% 49822 1.9%
10 Manufacturing PMI (points) 55.4 -3.7% 55.5 0.2% 50.8 -8.5%
Overall Score 6/10 3/10 5/10

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; growth is calculated sequentially, ie. month over month for all the indicators.

End

 

Media Division

 

PHD Chamber of Commerce and Industry