At the same time, there are other statistics that suggest a more sober approach. Here are four charts put these mutually conflicting trends in context.
Updated: Jan 08, 2021, 01:29 IST
According to the first advanced estimate by National Statistical Office (NSO), the Indian economy is expected to contract by 7.7% in fiscal 2020-21 – 20 basis points more than the 7.5% contraction projected by the Monetary Policy Committee (MPC) of the Reserve Bank of India.
High frequency indicators suggest greater optimism than the MPC’s forecast of 0.1% growth in the December quarter. At the same time, there are other statistics that suggest a more sober approach. Here are four charts put these mutually conflicting trends in context.
1) NIBRI, PMI, GST collections suggest a robust ongoing recovery
The two earliest high-frequency economic indicators – Purchasing Managers’ Index (PMI) for manufacturing and the Nomura India Business Resumption Index (NIBRI) – for the period ending Dec 2020 were released on Jan 4. Both of them suggest an upbeat economic environment. For the week ending January 3, NIBRI reached its highest ever value of 94.5 (100 is the pre-lockdown base). PMI manufacturing was at 56.4 in Dec 2020, making it the fifth consecutive month when it was above the critical threshold of 50, which signifies an expansion in economic activity compared to previous month. PMI Services, while it was above the threshold of 50 for the third consecutive month in Dec, has been losing momentum since Oct. Goods and Services Tax (GST) collections in Dec – they are supposed to capture transactions carried out in Nov – reached ?1.15 lakh crore, the highest ever nominal monthly collection. In an interview to HT, finance secretary Ajay Bhushan Pandey attributed the increase in December GST collections to “greater economic activities and better compliance with targeted approach to curb evasion”.