New Delhi: The trinity of the Stimulus of Policy, Financials and Confidence instilled by the Government during the last 9 months have enhanced the economic activity at significantly higher level, the December month economic activity based on the composite index of three broad economic indicators including GST collections, Passenger Vehicle Sales and SENSEX is at its 33 months high, said sh. Sanjay Aggarwal, President, PHD Chamber of Commerce and Industry in a press statement issued here today.
The composite PHDCCI Economy GPS including three lead indicators ; GST Collections, Passenger Vehicle sales and movement SENSEX is indexed at 100 with a base year of 2018-19 to check quickly the momentum of the economy based on three broad indicators representing not only demand and supply but also revenue growth of the government, financial markets movement in the country.
GST collections indicate the momentum of business activity, passenger vehicle sales is broad indicator of demand activity in the economy and movement of SENSEX indicate mood of the investors both domestic and foreign and India’s attractiveness to the foreign investors on the back of various reforms undertaken by the government, said Sh. Sanjay Aggarwal
PHDCCI Economy GPS Index has shown a sharp recovery from the lows of 43.8 in April 2020 to 55.3 in May 2020, 81.8 in June 2020, 92.8 in July 2020, 97.8 in August 2020, 108 in September 2020, 118 in October 2020, 115.4 in November 2020 and 124.1 in December 2020.
The value of PHDCCI Economy GPS Index stood at 124.1 in December 2020, showing an improvement by around 15 points as compared to its value in December 2019 which indicate that the economy has significantly recovered in the recent months, said Shri Sanjay Aggarwal.
| Movement of Index of GPS (base year at 2018-19=100) | PHDCCI Economy GPS Index for the FY 2020 and FY 2021 | Movement of PHDCCI Economy GPS Index over the years |
Source: PHD Research Bureau, PHDCCI
The continuous improvement in the broad economic indicators reflect that the worst is behind us. The series of stimulus announcements by the Government in last 9 months under the AatmaNirbhar Bharat Abhiyaan 1.0, 2.0 and 3.0 along with the calibrated measures undertaken by the RBI have pulled the economy from the lows of Q1 FY 2020-21 (-) 23.9% in Q1 2020-21 and (-) 7.5% in Q2 FY 2020-21, said Shri Sanjay Aggarwal
With the continuous improvement in the broad economic and business indicators, expectations of a positive GDP growth at 0.1% to 2% in Q3 and 2% to 4% in Q4 FY 2020-21 are becoming strong with a higher growth trajectory in FY 2021-22 at more than 7.7%, said Sh. Sanjay Aggarwal
On an average, the PHDCCI Economy GPS index during the period April – December of FY 2020-21 stands at 93 as compared with April – December FY 2019-2020 at 106.2, said Sh. Aggarwal
To continue the momentum of economic and business activity at the same pace, immediate policy attention is required towards credit access to industry and services sectors. Credit disbursement should be the top most priority at this juncture by the banking sector. The focus should be on ensuring provision of hassle free disbursements of loans vis-à-vis enhanced liquidity for MSMEs, especially in rural sectors, said Shri Aggarwal.
Going ahead, demand creation will have a multiplier effect on enhanced production possibilities, expansion of employment in factories, expansion of capital investments and overall virtuous circle of growth and development of Indian economy. The increased spending on infrastructure will give a multiplier effect to rejuvenate the aggregate demand in the economy and to mitigate the daunting impact of COVID-19 on the economy. Undoubtedly, robust growth of infrastructure is the key ingredient to realize the vision of Aatmanirbhar Bharat. The Government can consider raising investment funding for the National Infrastructure Pipeline (NIP) through borrowings from overseas markets by issuance of overseas bonds through an SPV that could act as a mega Development Financial Institution- DFI, said Shri Sanjay Aggarwal.
Also, there is a need to lower interest rates for consumers and businesses, lesser compliances for MSMEs vis-à-vis ease of doing business at the ground level and a lower tax regime to increase the personal disposable income of the people. Strengthening the MSMEs sector must also be on priority. It is suggested that the value chains of MSMEs should be enhanced; thus, making them more structurally competent to add to their efficiency, share in manufacturing sector, employment generation and the country’s overall export growth momentum, said Shri Sanjay Aggarwal.
PHDCCI Economy GPS Index is a composite index of 3 lead economic and business indicators with base year at 2018-19=100, which is a measure of the broad based economic and business activity. The PHDCCI Economy GPS Index is based on the monthly value of three high frequency indicators viz., GST Collection (Rs. Crore), Passenger vehicle sales (units) and SENSEX (Daily average) which provides movement of economic trajectory of the country.
Movement of the PHDCCI Economy GPS Index over the years
| Month | FY 2019 (Apr 2018 – Mar 2019) | FY 2020 (Apr 2019 – Mar 2020) | Change from FY 2019 to FY 2020 | FY 2021 (Apr 2020 – Dec 2020) | Change from FY 2020 to FY 2021 |
| April | 109.8 | 112.3 | 2.5 | 43.8 | -68.5 |
| May | 107.6 | 106 | -1.6 | 55.3 | -50.7 |
| June | 105.2 | 105.2 | 0 | 81.8 | -23.4 |
| July | 108.6 | 102.1 | -6.5 | 92.8 | -9.3 |
| August | 109 | 98.6 | -10.4 | 97.8 | -0.8 |
| September | 109.1 | 99.9 | -9.2 | 108 | 8.1 |
| October | 107.5 | 109.9 | 2.4 | 118 | 8.1 |
| November | 104.9 | 112.2 | 7.3 | 115.4 | 3.2 |
| December | 101.1 | 109.2 | 8.1 | 124.1 | 14.9 |
| January | 109.2 | 115.6 | 6.4 | – | – |
| February | 106.4 | 111.5 | 5.1 | – | – |
| March | 113.8 | 86.8 | -27 | – | – |
Source: PHD Research Bureau, PHDCCI
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