Third COVID wave impacts performance of key economic indicators: PHD Chamber

FPJ Web DeskUpdated: Friday, January 21, 2022, 12:41 PM IST
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More and more direct benefit transfers need to be enhanced for the urban and rural poor under the various welfare schemes./Representational image |

The rapid rise in the cases amid the third wave of Coronavirus has increased the uncertainty in economic environment and has impacted the performance of some of the lead economic and business indicators in the month of December 2021, said Pradeep Multani, President, PHD Chamber of Commerce and Industry.

Out of the 10 lead economic and business indicators of QET (Quick Economic Trends), tracked by the industry body PHDCCI, only 4 have shown uptick for the month of December 2021 as compared with 7 out of 10 indicators showing the uptrend in November 2021.

The ten economic and business indicators of QET include demand and supply indicators along with external and financial sectors indicators.

PHDCCI Quick Economic Trends: Growth Performance of Economic & Business activity so far

PHDCCI Quick Economic Trends: Growth Performance of Economic & Business activity so far | Source: PHD Research Bureau, PHDCCI

Positive growth

GST Collections, E-way Bill, Railway Freight and Exports have registered a positive growth in December 2021.

Exports registered the highest positive growth of around 39 percent in December 2021, increasing from $27.2 billion in December 2020 to $37.8 billion.

GST collections registered the y-o-y growth of 13 percent from Rs 1,15,174 crore in December 2020 to Rs 1,29,780 crore in December 2021. E-way Bills have shown y-o-y growth of 11.7 percent, in December 2021, increasing from 64.2 million in December 2020 to 71.6 million in December 2021.

Railway freight registered the y-o-y growth of 15 percent from 111.6 Million Tonnes in December 2020 to 128.3 Million Tonnes in December 2021.

Growth impacted

Unemployment rose sequentially by 13 percent in December 2021 from 7.0 percent in November 2021 to 7.9 percent in December 2021.

Exchange rate depreciated by 1.2 percent from average of 74.45 INR/USD in November 2021 to 75.28 INR/USD in December 2021.

The Manufacturing PMI decreased sequentially by (-)3.6 percent in December 2021, from 57.6 points in November 2021 to 55.5 points in December 2021.

Forex reserves registered the decline of (-)0.6 percent, decreasing from $638 billion in November 2021 to $634 billion in December 2021.

The Sensex (monthly average) declined by (-)3 percent in December 2021 from 59416 in November 2021 to 57663 in December 2021.

Passenger vehicle sales registered decline of (-)21.1 percent in December 2021 from 2,78,000 units in December 2020 to 2,19,241 in December 2021.

Supply-side issues such as high input prices, shortages of raw materials, among others are impacting the production possibilities and reducing the price cost margins of the producers.

Need to address price rise, raw material shortage

At this juncture, there is a need to address the high commodity prices and shortages of raw material to support the consumption and private investments in the country, said Multani.

The drivers of household consumption need to be further strengthened to enhance the aggregate demand as it will have an accelerated effect on expansion of capital investments, he said.

More and more direct benefit transfers needs to be enhanced for the urban and rural poor under the various welfare schemes of the Government to strengthen and sustain the recovery in the economic growth.

Mitigation of the pandemic impact with continuous handholding by the Government along with the effective adoption of COVID appropriate behaviour and protocols are needs of the hour.

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