Visible signs of economic revival; robust tax collection to support the economy: FinMin


With the reduction of the second wave of the COVID-19 pandemic and the easing of restrictions, the economy is showing signs of rejuvenation since the second half of May, the finance ministry said.

“The rapid recovery of economic indicators and the subdued impact of the second wave were supported by the revision of the RBI estimates for real GDP growth in the first quarter: 2021-22. To 21.4 percent, from the June estimate of 18.5 percent.” in its monthly review for July.

The movement of high-frequency indicators in July clearly indicates a broad-based economic recovery, the ministry said, adding that PMI for production in July returned sharply to the expansion zone, and GST collections regained the mark of 1 million rupees, again at 1, 16 lakh crowns.

“The increase in economic activity in July was further confirmed by trends in Kharif sowing, fertilizer sales, electricity consumption, vehicle registrations, toll collection, e-driving bills and digital transactions. The latest available data on the growth of eight core industries, car sales, tractor sales, port traffic, air passenger traffic also indicate a successive improvement over the reduction caused by the second wave, ”it states.

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While systemic liquidity continued to be in surplus in July, the decline in cash growth in circulation reflects a shift from austerity-induced austerity savings.

In addition, the ministry said bright prospects for economic normalization are evident in external sector indicators, with consumption of petroleum products recovering in June and exports jumping sharply to their highest monthly achievement in July of $ 35.17 billion.

At the fiscal level, the report points out that the Center’s fiscal deficit of 2.74 lakh kroner in April-June was 18.2 percent of budget estimates (BE), which is much less than in the same period last year with 83.2 percent from BE.

In addition, net tax revenue was 4.13 million kroner in the first quarter of 2021-22. Years compared to 1.35 million kroner in the first quarter of 2020-21. Years, while non-tax revenues increased by 738.4 percent over the same period last year after the RBI calculated a transfer surplus of 0.99 million kroner to the government.

“A strong recovery in tax collection is reducing fiscal resources towards meeting planned economic support,” the report said.

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As for inflation, which is above central bank comfort levels of 6 percent, the ministry said the recent rise was largely due to unfavorable supply shocks due to pandemic disruptions, rising international commodity prices and inflationary pressures in edible oils and pulses.

“Inflation remained above the 6 percent range in May and June, but those pressures are likely to be eased in the coming months by easing restrictions, advancing the southwest monsoon and recent supply policy interventions in the legume and oilseed market,” it wrote.

With the increase in vaccination numbers and high sero prevalence, the next waves of the pandemic are expected to be mild in terms of disease severity, the report said.

“However, it is imperative to adhere to COVID-compliant behavior and the appropriate protocol. At this time, the economy and society are at a key turning point where maintaining economic recovery, vaccination progress and appropriate behavioral strategies in accordance with COVID-19 are needed. synergy, “the ministry said.

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