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Focus: GS-III Indian Economy

Why in news?

  • Goods and Services Tax revenue in August stood at just over 1% lower than the amount collected in July.
  • On a year-on-year basis, GST collections dropped 12% from August 2019, according to data released by the Finance Ministry.
  • India’s manufacturing sector activity re-entered the growth territory in August, driven by a rebound in production volumes and new work, amid an improvement in customer demand following the resumption of business operations.

GST Revenues

  • Overall, revenues from import of goods dropped 23% from the previous year, while revenues from domestic transactions dropped 8%.
  • Small businesses with a turnover less than Rs. 5 crore have till September to file returns.
  • Coming after the disappointing GDP data for the first quarter – these figures indicate that collections are on the recovery path in the first month of the second quarter.
  • The collections on domestic transactions are just 8% lower than the same month last year, indicating a revival of economic activities post lockdown.

Manufacturing Sector rebound

  • August data highlighted positive developments in the health of the Indian manufacturing sector, signalling moves towards a recovery from the second quarter downturn.
  • The pick-up in demand from domestic markets gave rise to upturns in production and input buying.
  • Despite an expansion in new orders, job shedding continued in the Indian manufacturing sector.
  • The relocation of employees following COVID-19 pandemic was often linked to the reduction in staffing numbers.
  • However, not all was positive in August, delivery times lengthened to another marked rate amid ongoing COVID-19 disruption.
  • Meanwhile, employment continued to fall despite signs of capacity pressures, as firms struggled to find suitable workers.
  • The survey noted that the decline in foreign exports weighed slightly on overall new orders as firms cited subdued demand conditions from abroad.
  • However, new business received by Indian manufacturers expanded at the fastest pace since February.

-Source: The Hindu

February 2024