Some green shoots at last as Covid restrictions abate

With the second wave of the pandemic abating in most parts of the country and state governments lifting restrictions in phases, there are welcome signs of economic rejuvenation. Gross Goods and Services Tax (GST) collections showed a massive 33% uptick for July, compared to the same month last year, and about a 25% increase from the previous month of June. July’s GST collection at Rs 1,16,393 crore, reported by the Union finance ministry, has pierced the psychological barrier of  Rs 1 lakh crore and is a reflection of increased business and consumer activity. Simultaneously, car sales—an important bellwether of consumer sentiment— have also shown sizeable growth for most manufacturers. The sales of Maruti Suzuki, the largest of passenger car makers, were up nearly 37% at 1.33 lakh units compared to July 2020. Hyundai too registered a 26% growth with over 48,000 cars sold this July.

It may not be fair to compare sales to July of last year, which was probably the peak of the first pandemic wave; but the fact is pent-up demand has now begun to show. That consumers will only postpone their needs for some time is evident from FMCG company Hindustan Unilever’s financials. It reported a rise in net profit of 9.5% to Rs 2,061 crore as well as an increase in revenue of 13% to Rs 11,915 crore for the current year’s April-June period, when Covid infections and fatalities were the highest.

Lessons have been learnt since the first pandemic wave. Both the severity of restrictions and the steps for relaxing them have been left to local authorities and the conditions prevailing in each region. The overbearing central curfews have given way to more rational phasewise responses. Opening of markets, malls, public transport services and construction work due to the improvement in the Covid situation has allowed businesses to crank up again. The biggest booster is the collective sentiment that favours resumption of normal business activity. One only hopes that the third wave, if and when it comes, will be muted so that the current trajectory can continue.