Manufacturing, services lead recovery: SBI

GST showed improving trend since Sept.; mild, second wave likely in Jan.-Feb.

Recovery in gross domestic product (GDP) has been led by manufacturing and the largest components of the services sector such as trade, hotels, transport and communication, as per a State Bank of India (SBI) report.

The nominal GDP loss narrowed to ₹2 lakh crore in Q2 FY21 from ₹11.1 lakh crore in Q1, according to the report titled ‘Six months after unlock’ released by the economic research department

Manufacturing had minimised its losses by 91% from Q1, services sector by 43% and trade sub-segment by 80%, said SBI.

“This is quite obvious given the movement of freight traffic in Q2,” said Soumya Kanti Ghosh, group chief economic adviser, SBI and the report’s author. “During November, the business activity index showed persistent modest improvement in economic momentum,” said

Weekly food arrival data for November showed a rise in the arrival of cereals and vegetables to some extent but pulses and fruits saw a decline in arrival after recording a modest improvement in October.

In November the GST revenue was 1.4% higher than the year-earlier period. “The positive trend, which started from September, has sustained,” it was mentioned in the report.

However, state market borrowings had risen 46% compared with the year-earlier period, indicating the persisting stress in their revenue, it said.

“India’s agri and metal exports have bucked the trend and stayed upbeat. Pharma exports have also stayed positive. Meanwhile, imports have shown a broad-based decline,” it added.

Stating that India had now accumulated huge foreign exchange reserves, it said excluding gold, now India had the fourth largest foreign currency reserves.

The report citing corporate data said there has been a jump in the registration of companies dealing with food during the pandemic.

“Five States namely Maharashtra, Delhi, U.P., Karnataka and Telangana accounted for more than 50% of the newly-registered companies,” it said.

In manufacturing, sectors such as food, metal and chemicals and machinery and equipment reported major registrations, it added.

The report also mentioned there could be a possible mild second wave in January-February next year.

On the latest in COVID-19 cases, it said a number of States, including Haryana, Gujarat, Madhya Pradesh, Rajasthan, Himachal Pradesh, witnessed rising daily new cases in November, while States such as Kerala, West Bengal, Maharashtra, U.P. and Punjab reported lower or almost the same number of daily new cases in November 2020.

The report has also ranked the states on the basis of performance on three broad categories: Covid management, macro parameters (fiscal and CPI) and performance of states on Central Government Schemes.

The states’ ranking has revealed that North Eastern States are at the top, followed by Uttar Pradesh and Madhya Pradesh.

Chhattisgarh, West Bengal, and Himachal Pradesh come at the bottom.

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