Economy: Back To 'Normal'?

What seemed like a one-off issue is starting to look like a trend. Growth in collection from goods and services tax (GST) fell to 6.5 per cent, its lowest level in 40 months. At 6.5 per cent, GST collection barely tracked inflation, which means there was no volume growth. The trade deficit widened to $29.7 billion in August from $24.2 billion a year earlier. India's merchandise exports, its weakest spot and a tell-tale sign of India's poor competitiveness, declined to $34.7 billion in August from $38.3 billion in the same month last year. The annual gross domestic product (GDP) growth rate is down from 7.8 per cent to 6.7 per cent. The index of industrial production (IIP), which tracks the output of eight core industries, such as coal, oil, and electricity, was negative in August for the first time in three years. In September, car sales fell by 19 per cent over the same period last year.

- DEBASHIS BASU

Given how macro data is collected and collated by the government, some numbers may turn out to be less bad than they appear. For example, I would not rely much on the IIP data. However, the data bits on export and GST are highly reliable. So is the data that is sourced from companies, such as the purchasing managers' index. The PMI hit an eight-month low at 56.5 in September from 57.5 in August. The services PMI fell to 57.7 points in September to hit a 10-month low; it was 60.9 points in August 2024. Home loan disbursement was down 9 per cent in the first quarter, auto loans were up 2 per cent, and personal loans increased just 3 per cent. Credit disbursement by fintechs is stagnant. In April-August, diesel sales rose just 1 per cent year-on-year (Y-o-Y). A slowdown seems to have set in.