With the gradual speed up in the economic activities and vaccination drive gaining momentum, the Reserve Bank of India (RBI) in its monthly bulletin of August “The course of the economy over the month-and-a-half gone by has been altered by the slow retreat of the second Covid wave.”
It added, “Reaffirming the traction that the economy is gaining, the manufacturing activity is gradually turning around, while the contraction in services has moderated. Spurred by comfortable liquidity conditions, financial conditions stay benign and supportive of the recovery.”
“Aggregate demand conditions are buoyed by the release of pent-up demand post unlock, while the supply situation is improving with monsoon catching up to its normal levels and sowing activity gaining pace,” said the “State of the Economy” report.
Commenting on the overall state of the economy, the RBI in its monthly bulletin for August 2021 has observed that “aggregate demand conditions are buoyed by the release of pent-up demand post unlock… Reaffirming the traction that the economy is gaining, the manufacturing activity is gradually turning around, while the contraction in services has moderated. Spurred by comfortable liquidity conditions, financial conditions stay benign and supportive of the recovery”.
In the last four months, E-way bill collections reached their highest level, marking a growth of 17.3 per cent consecutively over June 2021. E-way bills, both intrastate and interstate, exceeded pre-pandemic levels when normalised to February 2020 values. Daily average E-way bills have fallen subsequently by 5.8% in August so far (up to August 8, 2021), with consequences for GST revenues in the future.
Rural demand remained optimistic with tractor sales reporting a growth of 3.3 per cent year-on-year in July, surpassing the pre-pandemic numbers. Motorcycle sales increased in July 2021, even though two-wheeler sales remained low.
Fuel consumption recorded a slight increase in July 2021 whereas aviation turbine fuel (ATF) marked a marginal improvement, said the article by RBI.
Since it was a favourable monsoon, sales in the FMCG industry picked up pace in rural regions and small towns. GST receipts in July 2021 crossed Rs 1 lakh crore for the first time, totalling Rs 1.16 lakh crore.
During April-July 2021, India’s merchandise exports totalled US$ 130.8 billion in 2018, accounting for almost a third of the country’s entire export objective of US$ 400 billion for 2021-22.
On the supply side, the article read, “In line with the monsoon’s progress, sowing activity is gradually gaining pace. As on August 13, 2021, Kharif acreage stood at 997.1 lakh hectares – 1.8 per cent below its level a year ago but 2.1 per cent above the normal acreage. Overall, around 93 per cent of sowing has already been accomplished, with sugarcane recording the highest acreage of 114.7 per cent of the normal. Acreage under tur – the main Kharif pulse – has been higher by 5.2 per cent over a year ago. Other pulses and coarse cereals are yet to achieve normal levels.”
As per the RBI report, The headline PMI Manufacturing Index, which had been low for 11 months, achieved a 3-month high in July, indicating that the economy is gaining momentum.