India's economic activity consolidates in Aug, PHDCCI foresees rebound

Out of the 10 lead economic and business indicators of quick economic trends (QET) tracked by PHDCCI, only four have shown uptick in the growth for August as compared with nine showing the uptrend in July, said Aggarwal.

E way bill, forex reserves, exchange rate and stock market have registered positive sequential growth in August compared to July, he said.

Stock markets have shown a sequential growth of 4.8 per cent from July to August, followed by a 2.7 per cent increase in E-way bills during the same period, said Aggarwal.

Sequential growth of forex reserves increased by 2.1 per cent from $621 billion in July to $634 billion in August. Exchange rate appreciated by 0.5 per cent between July and August, he said.

However, goods and services tax collections, railway freight, exports, passenger vehicle sales, unemployment and manufacturing purchasing managers index registered sequential decline in August compared to July, he said in a press release.

Supply side issues like high input prices and shortages of raw material are affecting production possibilities and reducing price cost margins of businesses, he said.

Significant pick-up in economic activity was observed from October 2020 that peaked in January this year and started declining from February. The same started increasing from May this year, peaked in July and declined again in August.

At this juncture, there is a need to further fuel the drivers of household consumption and private investments to enhance the aggregate demand in the economy as it will have an accelerated effect on expansion of capital investments in the country, Aggarwal said.

The government should frontload the National Infra Pipeline expenditure as increased spending on infrastructure will give a multiplier effect to rejuvenate the aggregate demand in the economy, he added.

ALCHEMPro News Desk (DS)