Fuelling India's economy, 9 indicators that point towards recovery

The Indian economy is on a steady path of recovery as suggested by various high-frequency indicators released for October. In the midst of a packed festive season, the economy has benefited immensely in October. From manufacturing, services, GST, card payments, commercial vehicle sales figures to jewellery, electronics and retail products, the vehicle of the economy is gaining momentum.

1. E-way bill

The e-way bill reached an all-time high of Rs 7.35 crore in October, raising the prospects of a further pick-up in Goods and Services Tax (GST) collections in November. According to the GST Network (GSTN) data, the average daily e-way bill generation reached Rs 23.7 lakh in October, a gradual increase of about 5% from Rs 22.6 lakh in September.

E-way bills are mandatory for all consignment movement above Rs 50,000, as it is an early indicator of demand and supply trends in the economy.

2. GST Collection

The GST collection in November may touch the Rs 1.4 lakh crore mark against Rs 1.3 lakh crore in October, which was the second-highest collection since the rollout in July 2017. This can be attributed to increased compliance and enforcement measures.

3. Services PMI

Activity in India’s services sector hit a ten-and-a-half-year high in October on strong demand, which boosted sales and production. The IHS Market Purchasing Managers’ Index (PMI) for services rose to 58.4 in October, from 55.2 in September.

4. Manufacturing PMI

PMI manufacturing for October rose to 55.9 as compared to 53.7 in September, which is at an eight-month high. A PMI value of more than 50 indicates expansion in economic activity as compared to the previous month. This is the third consecutive month that PMI manufacturing has increased and the latest price is the highest since February when it stood at 57.5.

5. Card transactions

Another indicator of a faster consumption revival is reflected in the Reserve Bank of India’s (RBI) card transaction data, which in value terms is at one-year high in October. Point of sale and online deals in October saw card transactions (debit and credit) worth Rs 1.37 lakh crore, up 20% from September and the highest since the release of card transaction data by RBI.

6. Export

India’s merchandise exports grew for the 11th consecutive month, by 42.33% year-on-year to $35.47 billion in October, while imports increased by 62.48%. The non-oil, non-gold category rose to $35.8 billion in October, reflecting a turnaround in domestic economic activity. Electronics exports will reach a record high of $15 billion in the current fiscal, which is higher than the pre-Covid level of $11.2 billion.

7. Power consumption

According to power ministry data, India’s electricity consumption grew by 4.8% to 114.37 billion units (BU) in October, indicating a good recovery amid a shortage of coal at power generation plants. The electricity consumption in October last year was 109.17 BU and in 2019 it was 97.84 BU in the same period. The maximum power demand met in October, or the highest single-day supply, stood at 174.60 GW, up from 169.89 GW in the same month last year.

8. Sale of commercial vehicles

Commercial vehicle (CV) sales are considered a major indicator of the country’s economic activity. October figures show that CV sales have been good in the country and companies have achieved growth between 7% and 58%. Segment leader Tata Motors sold 7,644 units of M&HCVs, 5,599 units of I&LCVs, 958 units of passenger carriers, and 17,025 units of SCV Cargo and Pickup.

9. UPI transactions cross $100 billion

According to data from the National Payments Corporation of India (NPCI), there were 4.2 billion UPI transactions worth Rs 7.71 lakh crore (about $103 billion) in October, marking an all-time high. In September, UPI recorded 3.6 billion transactions worth Rs 6.5 lakh crore, representing a 15% increase in the number of transactions and an 18.5% increase in value. The number and value of UPI transactions have more than doubled from this time last year.

Will the economy continue to improve?

All these indicators point towards economic recovery. However, we will have to see if these are the demands of the pre-festive season. If this trend is maintained even after the festive season, then we may see the economic recovery slowing down.