Will excessive GST refunds and sluggish state economies derail India’s progress?

On this State of the Economic system podcast, businessline’s Shishir Sinha talks to Aditi Nayar, Chief Economist, ICRA, to debate current high-frequency financial indicators which have made headlines over the previous few days.  

The episode dives into subjects comparable to GST collections, state-wise financial efficiency, the Buying Managers’ Index (PMI), and GDP progress, providing a nuanced understanding of India’s financial panorama. 

Sinha begins by addressing the current GST collections, noting a ten% year-on-year enhance however a sequential dip. Nayar explains that the year-on-year figures are extra dependable because of the inherent seasonality in month-to-month GST collections. She emphasises that the standard spikes seen post-quarter-ending months are adopted by anticipated dips, and therefore, the sequential decline shouldn’t increase issues at this level. Moreover, she mentions the excessive refunds this month, suggesting the necessity for a number of extra months of information earlier than drawing any conclusions. 

A good portion of the dialogue revolves round GDP progress. Nayar shares her observations on the Q1 progress price of 6.7%, which, though decrease than RBI’s estimates, was barely increased than ICRA’s expectations. She attributes this to stronger-than-anticipated efficiency in sectors like development, public administration, and agriculture. Trying forward, she anticipates a brief dip in Q2 as a result of excessive base results however expects a back-ended restoration in H2, supported by elevated authorities capital expenditure and a good agricultural outlook. 

The episode wraps up with a dialogue on fiscal deficit and retail inflation. Nayar expresses cautious optimism in regards to the authorities’s capacity to satisfy its capital expenditure targets regardless of the challenges posed by the monsoon and compressed timelines.  

(Host: Shishir Sinha, Producer: Amitha Rajkumar)

In regards to the State of the Economic system podcast

India’s financial system has been hailed as a vibrant spot amid the final gloom that appears to have enveloped the remainder of the world. However a number of sectors proceed to stutter at the same time as others appear set to fireside on all cylinders.