In spite of significant external disruptions, India’s economic activity seems to be holding up well. This shows in June’s gross goods and services tax (GST) mop-up, which climbed 14% from a year earlier to ₹1.95 trillion.
This pace was the fastest in more than a year. At the same time, India’s manufacturing purchasing managers’ index fell to 54.2 in June from 55 in May. Despite this decline, the reading held well above the 50 mark that separates expansion from contraction, reinforcing the good news on GST collections.
For the economy on the whole, these figures speak well. With tentative peace between the US and Iran, economic disruptions caused by the West Asian conflict are abating.
Although a full return to the pre-war scenario may take some time, even a gradual normalization should give India’s domestic growth drivers a helping hand. Steadier supplies should also put a lid on inflation, though weak rainfall poses risks.
Pre-emptive steps to prevent the hoarding of food items, timely releases of buffer foodgrain stocks and measures to boost other supplies could help ease supply constrictions. All in all, economic signals are positive, even though price pressures warrant a close watch.