Despite, the partial lockdown in most of the States during April, GST collection is expected to be in the range of ₹1.15- 1.20 lakh crore in April,2021 on account of raid economic recovery after lockdown in view of pandemic was removed, State Bank of India’s Ecowrap report said Friday.
“After clocking record collections in March 2021 ( ₹1.24 lakh crore), our internal simulation model indicates that April 2021 GST collections will be in the range of ₹1.15-1.20 lakh crore. This will be quite impressive given the fact that during the April month most of the States imposed partial lockdowns and this move is expected to hamper economic momentum,” the SBI research report Ecowrap said.
The report also added that the all India GST E-way bills till April 25 reached 4.89 crore and it is estimated that it would cross 5.5 crore comfortably, given the past trends.
GST revenue collection crossed ₹1 lakh crore-mark at a stretch for the last six months i.e from October-March and a steep increasing trend over this period is a clear indicator of rapid economic recovery post-lockdown measures, according to the report.
Besides that, closer monitoring against fake-billing, deep data analytics using data from multiple sources including GST, IT and Customs IT systems and effective tax administration also contributed to the steady increase in tax revenue over the last few months, said the report.
“We believe that any disruption in GST collections will be transient, and the States will have comfortable SGST collections. If we look at last year trend, given the SGST collection, allocation of IGST to states and Cess amount, it is around 89 per cent of the budgeted numbers of ₹6.5 lakh crore. There is a substantial portion of IGST which is unallocated,” the report said adding that if the 50:50 distribution takes place, then States will be only short by around ₹6,000 crore, which is impressive in the backdrop of pandemic and imposition of stricter lockdown measures imposed last year.
The report further added that the demand for work by households under MGNREGA increased by 92 per cent to 2.57 crore households in April 2021, highest in any April since 2013, as compared with 1.34 crore in Apr’20. This indicates the extent of reverse migration of workers to their native states.
Source: The Hindu Business Line
The more than 60% increase in cotton yarn price for the last two months has affected home textile exporters in Karur district. With an annual turnover of Rs Rs 5,000 crore, these textile units have asked the government to regulate yarn export and relax import duty on cotton to stabilise the cost of yarn.
While 50% of the yarn produced in the country is from Tamil Nadu, home textile units procure it from mills in Coimbatore and Dindigul districts. Though the lockdown enforced in March 2020 had adversely affected the home textile business, things started looking up five months later in August.
“It was the same time when the requirement for cotton yarn too increased, which subsequently encouraged its export,” said Atlas M Nachimuthu, president, Karur Textile Exporters Association. The cost of yarn gradually started increasing from November 2020. “Since we had already accepted orders on a price for home textile export material, we could not increase the price. This has been affecting our profit margin,” he said. We urge the government to relax the import duty on cotton and check on export of yarn to stabilise its price, said Nachimuthu.
On the other hand, small and medium units blame it on the large units for hoarding cotton yarn and selling it in the black market, adding to the cost. Executive committee member of Karur Textile Exporters Association R Stiffen Babu said prices are also increasing because of the unethical practices of big home textile units. Major exporters are blocking yarn supply by making bulk bookings and preventing small players from getting it, he said.
S Jagadesh Chandran, vice-president of South India Spinners Association, put the onus of the increased cost of yarn on Cotton Corporation of India (CCI). The cost of a kilogram of cotton now is fixed at Rs Rs 140 by CCI, which is Rs Rs 20 higher than the cost before the Covid-19 outbreak. Unless the central government brings down the cost of raw cotton, the cost of yarn is unlikely to come down, he said.
Source: The Times of India
The growth of India’s eight key infrastructure segments reached a 32-month high of 6.8 per cent in March compared to a year earlier, mainly due to a low base, the data released by the commerce and industry ministry showed.
The core sector output had contracted 37.9 per cent in April last year, with the imposition of a nationwide lockdown. While the pace of contraction declined in the subsequent months, positive growth was seen only in December and January. In February, it contracted 3.8 per cent after mild growth in the previous months.
The cumulative growth during April-March (2020-21) was 7 per cent.
Experts said a sharp growth in March should be interpreted with caution and the trend will continue to be the same over the next two months.
“The March, April, and May growth numbers for the core sector and industrial growth were expected to be high and misleading as they come on the back of sharp declines registered last year. March was just the beginning of the lockdown, which pushed back economic activity after which there were even sharper declines,” said Madan Sabnavis, chief economist at Care Ratings.
Out of the eight sectors, steel, cement, electricity, and natural gas witnessed double-digit growth in March. A closer look at the data shows that steel and cement output also declined sharply in March as compared to a year earlier. The sharp rise to some extent can be attributed to the base effect as the government imposed a nationwide lockdown in the last week of March 2020.
“However, also the end-of-the-year phenomenon of infra projects being on track did provide impetus to cement and steel in particular. States and the Centre have been expediting their capex, which gets reflected in these numbers,” Sabnavis said.
The remaining sectors — coal, crude oil, fertilizer, and refinery products — are yet to get back to last year’s level.
Experts said despite localised lockdown amid a second wave, core sectors will continue to grow sharply in April, mainly driven by a base effect.
“We have observed a slackening in the sequential momentum in April in electricity demand, vehicle registrations, and generation of GST e-way bills, revealing the impact of the recent surge in Covid infections and localised restrictions. For instance, after a year-on-year expansion of 48 per cent in electricity demand at an all-India level during April 1-9 on the low base, the pace moderated to 36 per cent during April 10-25,” said Aditi Nayar, chief economist at ICRA.
Source: The Business Standard
The Kanara Chamber of Commerce and Industry (KCCI) has urged the Union Finance Minister to address the problems of MSME (micro, small and medium enterprises) sector following the second wave of Covid and lockdowns associated with it.
In a letter to the Union Finance Minister, Nirmala Sitharaman, the KCCI President, Isaac Vas, said that operations are down the MSME sector, which is facing the challenge of meeting commitments such as payment of salaries and wages, rents, power dues, tax dues and bank loan servicing commitments.
Requesting the Government to expedite the refunds of income tax, GST, duty drawback, he also sought the interest and penalty waiver on payment of power dues to Escoms (electricity supply companies) for MSMEs and domestic users.
He said the banks should extend interest waiver for MSMEs for the loans obtained, covering the lockdown period. Funding should be given to MSMEs under Emergency Credit Line Guarantee Scheme under the Aatma Nirbhar package.
Seeking relaxion of norms for declaration of a loan account as NPA, including six-month repayment holiday from April 2021, he said there should be relaxation of penal fees for non-submission of stock statements, financial statements in connection with bank borrowings for the lockdown period and the following three months.
Stating that the rate of RoDTEP (Remission of Duties and Taxes on Export Products) is not finalised, he said considering the pandemic situation the Government should fix an appropriate rate for RoDTEP at the earliest.
Special package should be given to tourism, hospitability and travel industry, Vas said.
KCCI also urged the Government to provide relaxation in some of the compliance matters.
Source: The Hindu Business Line
Chinese President Xi Jinping on Friday wrote to Prime Minister Narendra Modi, expressing sympathies amid the Covid-19 led crisis in India. “President Xi says, “I am very concerned about the recent situation of Covid-19 pandemic in India. On behalf of the Chinese government and people, as well as in my name, I would like to express sincere sympathies to the Indian government and people,” Chinese ambassador to India Sun Weidong said in a tweet.
“Humanity is a community with a shared future. Only through solidarity and cooperation can countries around the world ultimately defeat the pandemic,” Weidong said.
China is also ready to strengthen cooperation with India in fighting the pandemic and is ready to provide support in this regard, Jinping said in the letter. “The Chinese side stands ready to strengthen cooperation with the Indian side in fighting the pandemic and provide support and help in this regard. I believe that under the leadership of India, the Indian people will surely prevail over the pandemic,” he said on Twitter. External Affairs Minister S Jaishankar said he received a call from China’s State Councilor and Foreign Minister Wang Yi conveying the country’s sympathies at India’s Covid-19 challenge.
Source: The Business Standard
The European economy contracted 0.6 per cent in the first three months of the year as slow vaccine rollouts and extended lockdowns delayed a hoped-for recovery.
The contraction in the 19 countries that use the euro currency compares to a robust rebound underway in the United States.
Growth figures announced Thursday showed the US grew 1.6 per cent during the first quarter, with business supported by strong consumer demand. On an annualised basis, the US grew 6.4 per cent.
The second straight quarter of falling output, following contraction in the fourth quarter of 2021, confirms Europe’s double-dip pandemic recession. Two quarters of falling output is one definition of a recession.
One factor in Europe is a slow vaccine rollout and prolonged lockdowns.
Another is less government support for the economy.
US President Joe Biden’s USD 1.9 billion relief package, coupled with spending from earlier support efforts, will mean additional cash support of about 11-12 per cent of annual economic output for this year, according to economists at UniCredit bank.
By contrast, the European fiscal stimulus amounts to about 6 per cent of gross domestic product.
Source: The Financial Express
The country’s exports to European Union countries may stay in a danger zone in the time to come as the European parliament on Thursday adopted a resolution urging the EU authorities to review GSP plus status as blasphemy cases are on the rise in Pakistan.
“Yes, it is a matter of grave concern, but EU authorities have not formally told the government of Pakistan about its intent to review the GSP Plus. The adoption of resolution by the EU parliament shows the sentiments of the EU countries, but it is not binding on the authorities to consider reviewing GSP Plus facility,” a senior official of the Commerce Ministry told The News.
When contacted, Commerce Secretary Muhammad Sualeh Ahmad Faruqui said: “We are in active consultation with the relevant stakeholders. Pakistan is committed to fulfilling obligations under EU GSP plus regime and has made consistent progress in this regard. We are hopeful that through continued engagement and effort, we’d be able to clear up any haze and misgivings in this respect.”
The official also told The News and the Pakistan government is in contact with its representative at the Brussels and an important meeting has been convened for next Monday that will finalize the modus operandi on how to go about it and tackle the situation after the adoption of the resolution after having an input from our representative stationed at the Brussels. "The GSP plus facility is available to Pakistan till 2022 and a review by the EU is to take place in January 2022 to decide if this facility is to continue or not."
According to Executive Director of All Pakistan Textile Mills Association (APTMA) Shahid Sattar, of textile exports of $13 billion, the exports to EU countries stand at $6 billion and if this facility is withdrawn, major dent in exports will take place and in return the industrial activities will plummet in the country which may trigger to a new surge in unemployment. He said that the government should preempt the situation and come up with effective diplomatic endeavors to avert any EU action against the GSP plus facility. The official said that the EU is Pakistan's most important trading partner, accounting for 12.8 per cent of Pakistan's total trade in 2015 and absorbing 23.7 per cent of Pakistan's total exports. Pakistani exports to the EU are dominated by textiles and clothing, accounting for 82 per cent of Pakistan's total exports to the EU in 2016. Pakistan's imports from the EU are mainly comprised of machinery and transport equipment (40.2 per cent in 2016) as well as chemicals (19.5 per cent in 2016).
From 2006 to 2016, EU28 imports from Pakistan have almost doubled from €3,319 to €6,273 million. The growth of imports from Pakistan has been particularly fast since the award of GSP Plus (€5,515 million in 2014). According to the latest data, Pakistan’s exports to the EU in 2018-19 stayed at $7.936 billion while the import stood at $5.478 billion whereas the export to France in 2018-19 was at $400 million. However, in 2019-20, the country's exports to the EU were at $7.477 million and the imports stood at $4.167 million.
Source: The International News
China's factory activity growth slowed and missed forecasts in April as supply bottlenecks and rising costs weighed on production and overseas demand lost momentum.
The country's official manufacturing purchasing managers' index (PMI) fell to 51.1 in April from 51.9 in March, data from the national Bureau of Statistics (NBS) showed on Friday.
It remained above the 50-point mark that separates growth from contraction on a monthly basis but was below the 51.7 expected in a Reuters poll of analysts.
"Some surveyed companies report that problems such as chip shortages, problems in international logistics, a shortage of containers, and rising freight rates are still severe," NBS statistician Zhao Qinghe said in a statement accompanying the official PMI.
That contrasted with a private-sector survey, also released on Friday, which showed factory activity in April expanded at the fastest pace in four months although businesses in that release also reported a sharp surge in input costs.
"With the economy already above its pre-virus trend and the policy stance less supportive, growth momentum will wane this year," analysts from Capital Economics said in a note on the PMI.
China's economic recovery quickened sharply in the first quarter of the year with record growth of 18.3%, shaking off the hit from last year's COVID-19-induced slump. Analysts now expect the world's second-largest economy to grow 8.6% in 2021.
The robust economic recovery has outpaced rebounds seen in manufacturing competitors such as India, which are still struggling to contain new waves of coronavirus outbreaks.
Policymakers in Beijing have signalled they are keen to avoid sudden policy changes that could derail the recovery.
"We expect that an export demand recovery will help factory orders and that the May holiday will help the services sector," said Iris Pang, chief economist for Greater China at ING, in a note, referring to China's labour day vacation due to start on Saturday.
Overseas demand should also pick up as Covid-19 is brought under control in major markets like the United States and Europe, she said, but chip shortages could continue for several quarters and push up prices of electronic goods.
From delayed car deliveries to a supply shortfall in home appliances, businesses and consumers across the globe are facing the brunt of an unprecedented shortage in semiconductor microchips, exacerbated by sanctions against Chinese tech companies.
The official PMI, which largely focuses on big and state-owned firms, showed businesses again laid off workers in April after increasing hiring the month before for the first time in nearly a year. A sub-index for employment slipped to 49.6 from 50.1 in March.
A gauge for new export orders stood at 50.4 in April, slipping from 51.2 a month earlier.
Riding the broader economic recovery, surging demand for raw materials fuelled Chinese industrial firms' robust profit growth in March as profits upstream outperformed those in downstream sectors.
A sub-index for raw material costs in the official PMI stood at 66.9 in April, easing from March's 69.4 but maintaining a rapid clip.
In the services sector, activity expanded for the 14th straight month, but at a slower pace, dragged down by a sub-index for construction activity.
Source: The Business Standard
