Despite global uncertainties due to the Russia-Ukraine war looming large and effects of supply chain disruptions continue globally, key domestic economic indicators have started showing signs of a recovery in the Indian economy. GST collections and exports are touching record high numbers, while housing sales as well as new project launches are also gaining good momentum.
In a strong indication, the goods and services tax (GST) collections hit an all-time high of Rs 1,42,095 crore in March, according to the latest data. “The gross GST collection in March 2022 is at all-time high, breaching earlier record of Rs 1,40,986 crore collected in the Month of January 2022,” the finance ministry said in the statement adding that it is driven by economic recovery and anti-evasion drives such as action against fake billers.
Also, the country’s merchandise exports spurt to a record high of USD 418 billion in the financial year 2021-22. India’s goods trade (exports and imports) crossed USD 1 trillion during 2021-22 as the country’s imports too have touched an all-time high of USD 610 billion, according to the latest data released on Sunday. Merchandise exports were worth USD 292 billion in 2020-21.
However, experts said that the economy is definitely witnessing signs of recovery by downside risks to growth are there that are needed to go to see full recovery.
HDFC Chief Economist Abheek Barua said better tax collections, bouyancy and other measures help in the record GST collections. He added that the record exports are majorly on the back of outbound shipments of petroleum products, and the recovery in the US economy and the world looking for alternative supply chain partners away from China also helped the Indian exports.
Niti Aayog Vice Chairman Rajiv Kumar has said India is on the cusp of a major economic recovery and talks of possible stagflation are “overhyped” as a strong economic foundation is being laid with the reforms carried out by the government over the last seven years.
Barua also said, “The economy has started seeing signs of recovery after two years of the pandemic but it is not completely out of the woods. There are worries on the front of the Russia-Ukraine war and high inflation. There could be a problem on the household demand front.”
Housing sales are also gaining momentum. During the March 2022 quarter, housing sales were the highest in seven years on a quarterly basis at about 99,550 units in major cities in India. The sales are a jump of about 70 per cent as compared with around 58,300 in the year-ago quarter, according to real estate consultant Anarock. Mumbai Metropolitan Region (MMR) and National Capital Region (NCR) accounted for over 48 per cent of the total sales in the top-seven cities.
Bank of Baroda Chief Economist Madan Sabnavis said, “There is a recovery in the economy now but it is not fully healed. The Russia-Ukraine war impact is there. Higher inflation levels are adversely affecting industries, including micro, small and medium enterprises.”
He added that in the wake of external factors such as the Russia-Ukraine conflict, most of the GDP (gross domestic product) forecast have been revised downwards. In its monetary policy annoucement on Friday, the Reserve Bank of India (RBI) is also likely to revise down its GDP growth forecast due to uncertainties.
The value of new projects, according to data from the Centre for Monitoring Indian Economy (CMIE), has also improved significantly. During the March 2022 quarter, the value was more than double at Rs 5.1 lakh crore than what was seen in the year-ago March 2021 quarter (Rs 2.45 lakh crore).
During the financial year 2021-22, collections from direct taxes, including income tax and corporation tax, jumped over 49 per cent y-o-y and touched record Rs 13.81 lakh crore. In FY21, the net collection stood at Rs 9.23 lakh crore.
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