Union finance minister Nirmala Sitharaman is right, a spate of positive economic data from last month gives hope of a rebound but with a note of caution. On the heels of the ongoing festival season seeing robust retail performance of the consumer merchandise and automobile sectors, October has also seen GST collections crossing the Rs 1 lakh crore mark for the first time since the nationwide lockdown. Plus the IHS Purchasing Managers’ Index for manufacturing, NCAER’s Business Confidence index and Nomura India Business Resumption Index have posted improvements.
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But that note of caution is incredibly important. We have to observe whether festival season retail performance sustains afterwards, or is just a reflection of much pent up demand. The GST collections do indicate that economic activity is headed to pre-lockdown levels. But improvement in the other indices has to be seen in terms of the base effect too, including that the economy had contracted by a horrifying 23.9% in the June quarter. The key question the finance minister has to answer is whether the Centre is doing its part adequately, including providing appropriate tailwinds to the economy. Here a well calibrated fiscal stimulus is the urgent need of the hour.
October GST collection tops Rs 1 lakh crore, 1st time since February
