The Finance Ministry on Monday said that the activity levels in the economy are steadily rising, as reflected in the latest high-frequency indicators, and there are clear signs that the rise in consumption in financial year 2021-22 is inducing investment.
The release of quick estimates of Index of Industrial Production (IIP) for the month of September 2021 shows a sustained increase in industrial production, the ministry said in a release.
India's industrial production grew by 3.1 per cent in September as compared to 1 per cent in the same month last year, according to IIP data released by the National Statistical Office (NSO) on Friday.
"The IIP in FY 2021-22 has grown from an average of 121.3 in Q1 to 130.2 in Q2. The IIP in Q2 would have been still higher but for heavy monsoons disrupting mining activity, especially coal and consequently electricity generation, that repressed the growth of overall production index," the release said.
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The manufacturing index in IIP has held steady and is likely to rise in subsequent months mirroring the eight-month high in Purchasing Manager's Index (PMI) for manufacturing reaching 55.9 in October 2021, the ministry said.
Besides, it said the sharp increase in capital goods index from an average of 74.0 in first quarter of FY 2021-22 to 91.7 in second quarter underscores a significant recovery in investment. "There are clear signs of investment being induced by rise in consumption in FY 2021-22 as consumer durables index increases from 91.7 in Q1 to 121.2 in Q2 while consumer non-durables index also moved up from 139.1 to 146.9 across the two quarters."
On inflation, the Finance Ministry said that the annual CPI inflation declined from 5.6 per cent in Q1 to 5.1 per cent in Q2 and was further lower at 4.5 per cent in October of FY 2021-22.
Further describing the green shoots, the ministry said activity levels have been steadily increasing in FY 2021-22 as reflected in the latest levels of several high-frequency indicators including e-way bills, power consumption and GST collections.
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GST revenue collection for the month of October stood at Rs 1,30,127 crore, the second-highest collection since the implementation of the tax regime. "Tractor sales hit a record high of 1,15,615 units in October 2021, 25 per cent higher than September 2021 volumes, indicative of sustained growth in the agricultural sector," it added.
The contact-based services sector is also showing a strong revival with the weakening of the pandemic, it said citing the PMI for services which accelerated to a decadal high of 58.4 in October. Besides, it said exports are emerging as the engine of growth for the economy, having crossed $30 billion mark for the seventh successive month in October.
Commerce and Industry Minister Piyush Goyal on Sunday said that the country is on track to achieve historical highs in goods and services exports. He said India is on course to achieve $400 billion of merchandise exports in the current financial year.
The Finance Ministry also said that the outstanding credit of scheduled commercial banks has been steadily rising in FY 2021-22.
"Retail credit in particular has been noticeably increasing suggestive of strengthening consumption in the economy. According to CIBIL, inquiry volumes have increased by 54 per cent between February and October of 2021 as economic activity has gained momentum," it concluded.
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