Many obstacles to the economy remain

- At the bottom of manufacturing as well as service sector activities in the country, the decline in GST collection indicates that adversity is still prevailing.

The second wave of corona in the country has now slowed down. Many rating agencies and organizations are saying that the economy suffered less damage during the second wave than the first one. However, the real situation on the other side of the issue is that many barriers to the Indian economy still remain. Manufacturing as well as service sector figures released earlier this month have proved weak. Despite the increase in e-way bill, GST collection has also declined. Which proves that adversity is still rife.

However, there has been some good news in recent times regarding the macroeconomic outlook of the country. Figures for advance collection of personal income tax and corporation tax in the first quarter of the current financial year are examples. According to data from the Central Board of Direct Taxes, advance tax collection has increased by 150 per cent over the same quarter last year.

In May, the collection of Goods and Services Tax (GST) was Rs. 1.04 lakh crore. Which was lower than the previous month. E-way bill figures so far in June show that this too could pick up speed. But, according to recently released figures, it is Rs. 1 lakh crore.

The Reserve Bank of India (RBI) in its July bulletin outlined some other factors that are leading the economy to recovery with optimism. The central bank estimates that small and local lockdowns during the second wave hurt demand, not supply. The bulletin emphasized that many aspects of the overall supply situation, including agriculture, were intact. The monsoon is also 31 per cent above normal so far. This suggests that these good conditions may continue. There have also been indications from the RBI that it feels that industrial production and exports have increased. However, the RBI has slashed its full-year GDP growth forecast from 10.7 per cent to 7.5 per cent due to the second wave of Corona.

There are still many risks to the country's sustainable economic recovery. Given the level and pace of vaccination, it cannot be said with certainty that India will be completely safe from the second wave of epidemics. The question of inflation remains the same. Consumer price inflation stood at 7.5 per cent in May, much higher than expected.

According to the RBI, the second wave has hit aggregate demand, as inflation may become more difficult when demand picks up. On an annual basis, the fuel sector inflation stood at 11.5 per cent. This shows that external factors will have their own role. While the RBI's Monetary Policy Committee has projected inflation at 5 per cent for the current financial year, it may have to reconsider going further. The above rates do not fully correspond to the macroeconomic picture presented in the RBI bulletin.