PHDCCI Economy GPS Index June 2021
No. PR- 049
July 8, 2021
PHDCCI Economy GPS Index June 2021
Economic recovery restarts in June 2021: PHD Chamber
Gradual receding of second wave of pandemic coronavirus has created scope for economy to recover from the daunting impact witnessed in April and May 2021; the lead economic and business indicators have shown improvement in June 2021. The PHDCCI Economy GPS index has therefore increased to 110.3 for June 2021 from the nine months low of 91.5 for the month of May 2021 (Base year 2018-19 = 100), said Sanjay Aggarwal, President, PHD Chamber of Commerce and Industry, in a press statement issued here today.
PHDCCI Economy GPS Index at 110.3 for June 2021 is higher by 35.2 points from the Economy GPS Index for June 2020 at 75.1, said Sanjay Aggarwal.
Sequential growth of passenger vehicles increased by 190.4% in June 2021 from 88,045 units in May 2021 to 2,55,674 units in June 2021. The sequential growth of average of daily close of SENSEX also rose by 5.2% from 49823 in May 2021 to 52400 in June 2021. However, sequential growth of GST collections decreased by (-)9.6% from Rs. 1,02,709 crore in May 2021 to Rs. 92,849 crore in June 2021.
Low sequential growth of GST collections in June 2021 is attributed to the low business transactions made during May 2021 as most of the States/UTs were under COVID induced complete or partial lock down, said Sanjay Aggarwal.
However, GST collections at Rs. 92,849 crore in June 2021 are 2.1% higher than the level of corresponding month of previous year, ie. Rs 90,917 crore in June 2020, said Sajnay Aggarwal.
The PHDCCI Economy GPS Index during the period April – June (Q1) of FY 2021-22 stands at 108.7 as compared with 54.9 for April – June (Q1) FY 2020-2021, said Sajnay Aggarwal.
On the back of declining new Coronavirus cases, gradual unlocking in various parts of the country and calibrated economic reforms announced by the Government, the economic recovery has resumed once again in the country, said Sanjay Aggarwal.
PHDCCI Economy GPS Index have 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 and 110.3 for June 2021 as compared with 75.1 for June 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 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 private investment are not coming in shorter period. The 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.
Government/ PSU payments must not be delayed due to Work From Home issues or shortage of funds, said Sanjay Aggarwal.
Let’s target to vaccinate at least half of the population in next 2-3 months, i.e. by 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|
Source: PHD Research Bureau, PHD Chamber
PHD Chamber of Commerce and Industry