Good news ahead of Budget: After record GST collection, Manufacturing PMI improves significantly

Ahead of the Union Budget, macro indicators are painting a positive picture of the Indian economy. In the Month of January, GST collection came in at Rs 1.2 lakh crore as the economy picked up steam, now to add to that, the manufacturing Purchasing Managers’ Index (PMI) rose from 56.4 in December to 57.7 in January — the strongest improvement seen by the sector in the last three months. “The Indian Manufacturing PMI remained well inside the positive territory in January, signalling a sixth consecutive improvement in business conditions and moving further away from the COVID-related contractions recorded around mid-2020,” said Pollyanna De Lima, Economics Associate Director at IHS Markit.

Earlier, yesterday the Finance Minister said in a statement that January collections of GST were the highest ever since the nationwide tax was implemented in 2017. The collections were 8% higher than the last month of 2020. Now, GST collections have been above the Rs 1 lakh crore mark for 4 consecutive months. GST revenue during October-January has grown on an average of 8 per cent, as compared to (-) 24 per cent during the first half (April-September) of the fiscal year.

“An important insight from the January survey was a pick-up in inflationary pressures, as lingering supply-side squeeze drove the sharpest increase in purchasing costs for over two years. The favourable demand environment was accommodative of price hikes and charges were raised at the fastest pace in over a year,” said  Pollyanna De Lima of IHS Markit.