New Delhi, Nov 26 (Mayank Nigam) Ahead of India’s Q2 FY22 GDP numbers lined up for release by the end of November, a monitoring of India’s macro-fiscal performance in a private survey shows India on course to achieve a growth of 9.5% plus in FY22 with 8% growth in 2QFY22, supported by expansion in PMI manufacturing for the fourth successive month in October 2021, increase in PMI services to a high of 58.4 and GST collections remaining above the benchmark level of Rs 1.0 lakh crore for the fourth consecutive month in October 2021. The Purchasing Managers’ Index (PMI) is an index of the prevailing direction of economic trends in the manufacturing and service sectors. Expansion in PMI manufacturing saw its level increasing to an eight-month high of 55.9 from 53.7 in September 2021 backed by a sharp expansion in new orders, production and input purchasing during the month.
Rising from 55.2 in September 2021 to 58.4 in October 2021, PMI services showed the strongest rate of expansion in ten and a half years. Further, October 2021 marks the third successive month of expansion in PMI services. The composite PMI Output Index (seasonally adjusted) increased from 55.3 in September 2021 to 58.7 in October 2021, its highest level since January 2012, reflecting a strong pace of output expansion in both manufacturing and services sectors owing to a pick-up in demand due to the festive season, according to Ernst & Young’s Economy Watch report for the month of November. Goods and Services Tax collections saw a mop up of Rs 1.30 lakh crore, its second highest level since April 2020, the report states. According to DK Srivastava, Chief Policy Advisor, EY India, available signals indicate that India is well on course to clock an annual growth of 9.5% plus in FY22 which would require a second quarter growth of about 8.0% following the first quarter growth of 20.1%. “Together, these two quarters would contribute about 7.0% points of the projected annual growth of 9.5%, assuming a quarterly weight of 25% each and the currently available high frequency indicators confirm this projected robust recovery,” says Srivastava.
The study identifies other push factors for the estimated GDP performance like growth in outstanding bank credit by scheduled commercial banks (SCBs) remaining stable at 6.7% in September 2021, similar to that in August 2021 and merchandise exports growing at 43.0% in October 2021 as compared to a contraction of (-)5.0% in October 2020. When compared to October 2019 levels, exports grew by 35.9% in October 2021, reflecting robust external demand.“Merchandise exports and imports growth remained high at 43.0% and 62.5% respectively in October 2021 as compared to 22.6% and 84.8% respectively in September 2021 driven by higher global crude prices. Merchandise trade deficit remained elevated at US$19.7 billion in October 2021. Externally, the report highlights India’s key role in the deliberations of the G-20 Rome summit with promise of five billion additional COVID vaccines for the world in the short run and proposed important health initiatives as significant. This is because India alongwith China saw their share in world GDP undergoing significant changes amidst the overall share of G20 countries in world GDP broadly remaining stable in the range of 79.6% to 81.8% between 2000 to 2020. The share of China increased from 7.3% in 2000 to 18.3% in 2020 and that of India increased from 4.0% to 6.8% during this period at the cost of a fall in the share of European Union (EU) from 20.3% to 15.0% and that of the US from 20.4% to 15.8% over the same period. Going forward, as per the IMF’s forecasts, China and India are expected to show maximum gains in their shares between 2020 and 2025 of 1.5% points and 1.1% points respectively.