With gradual receding of the second Covid-19 wave, economic activities picked up in June, creating a scope for the economy to grow. In the months of April and May 2021, Indian economy witnessed a daunting impact. However, from June 2021, the economic and business indicators have shown improvement. The PHD Chamber of Commerce and Industry (PHDCCI) in its Economy GPS index states that recovery for Indian economy began last month.
“The Economy GPS index is a composite index of three economic and business indicators having the base year 2018-19 at 100 which is used to measure the broad economic and business activity during a given period,” PHDCCI said. These indicators are GST collection, passenger vehicle sales and Sensex (daily average). For June 2021, the GPS index was recorded at 110.3 from the nine months low of 91.5 for the month of May 2021.
While the index has shown signs of recovery, Sanjay Aggarwal, President, PHD Chamber of Commerce and Industry, there is a need for effective policy measures that will enable demand and give an impetus to maintain recovery momentum. “The movement of key economic and business indicators as measured through PHDCCI Economy GPS Index imply that to attain a higher growth trajectory, effective policy measures are needed once again to support demand creation and to have a multiplier effect on enhanced production possibilities, expansion of employment in factories, expansion of capital investments and overall virtuous circle of growth and development of Indian economy,” Aggarwal said.
Apart from this, Aggarwal has given some recommendations:
- Interest rates for consumers as well as businesses need to be lowered along with lesser
- compliances for MSMEs and ease of doing business,
- In order to increase the personal disposable income of the people, a lower tax regime is beneficial.
- Credit disbursement should be at priority by the banking sector. There is also a need to focus on ensuring provision of hassle free disbursements of loans and enhanced liquidity for MSMEs, especially in rural sectors.
- In order to attain recovery momentum of economic and business activity, Aggarwal believes immediate policy attention is required towards credit access to industry and services sectors.
- Reforms can be introduced to ease of doing business that will further enhance demand and job creation. This is also expected to increase private investments.
- Government need to focus on infrastructure spending as well that would allow overcome supply chain constraints as well as boost confidence among firms and households,
- Apart from this, implementation of expansionary fiscal policy should be continued with an aim to facilitate the transformation to a digital and inclusive economy, while managing fiscal and financial risks.
Going forward, PHDCCI expects a strong growth trajectory for the current financial year 2021-22 on the back of statistically low base effect of FY 2021.