Data releases have revealed slower growth in fuel consumption and private vehicles and commercial vehicle sales in July versus June 2018. Coming to specifics, diesel and petrol consumption growth in July slowed to 4.9 per cent YoY or year-on-year – versus 7.8 per cent in June – and 8 per cent – versus 15.2 per cent in June – respectively. Domestic sales of two-wheelers exhibited growth of 8.2 per cent YoY in July against the contraction in passenger vehicles, that is -2.7 per cent YoY. Commercial vehicles sales continued to record double-digit growth at 29.7 per cent YoY).

The latest macroeconomic indicators further show that the area sown under kharif crops as on August 10, declined to 92.5 mn hectare (ha) from 93.9mn ha during the same time last year; registering a fall by -1.5 per cent YoY.

Meanwhile, the Index of Industrial Production (IIP) growth touched 7 per cent YoY in June versus 3.93 per cent in May, the highest since January at 7.5 per cent YoY, partly due to low base. All sectors posted better growth versus May 2018, with manufacturing recording a growth of 6.9 per cent YoY versus 3.7 per cent in May.

The RBI, in its fourth survey on inward remittances to India, reported that 82 per cent of total remittances received by India in FY17 were sourced from eight nations – the UAE, US, Saudi Arabia, Qatar, Kuwait, Oman, UK and Malaysia. Four states, that is Kerala, Maharashtra, Karnataka and Tamil Nadu, received 58.7 per cent of the total remittances.

Policy and reforms

The 29th GST Council meeting held on August 4 concluded to provide 20 per cent cashback on the GST component – limited to Rs 100 per transaction – if payments were through specific instruments. Further, a group of ministers was appointed to work with the law and fitment committee to address issues concerning MSMEs.

*The RBI has announced to transfer a surplus of Rs 50,000 crore to the centre for the year ending June 2018 as compared to Rs 30,700 crore last year. This Rs 50,000 crore includes the interim dividend of Rs 10,000 crore granted to the centre in March this year. Hence, only Rs 40,000 crore entered the centre’s accounts for FY19 versus the budgeted ‘Dividend from RBI/ Nationalised Banks & Financial institutions” of Rs 54,800 crore.

*The Karnataka state cabinet has approved waiver of existing farm loans worth Rs 9,450 crore in respect of cooperative banks, benefitting 20 lakh farmers

*The government has raised the import duty on 328 textile products from 10 per cent to 20 per cent, to incentivise the domestic industry.

*The centre has extended the suspension of the reverse charge mechanism on the purchase of goods or services by registered dealers from unregistered dealers within the state till September.

*The centre is planning to levy 12 per cent interest on claim payments that are not settled within two months under the Pradhan Mantri Fasal Bima Yojana.

The government is likely to save up to Rs 10,000 through EAT (Expenditure Advance Transfer) the new fund distribution module based on the Public Financial Management System.

Source: JM Financial