End of the tunnel?: On GST revenues
The welcome pick-up in GST revenues may not yet signal a sustainable economic recovery
Over ₹1.05 lakh crore has been collected from the Goods and Services Tax in October, the highest monthly revenue from the indirect tax since February 2020. This marks the second successive month of a year-on-year uptick in the GST kitty — the 10.25% rise in October was preceded by a 4% increase in September. Coming on the back of six successive months of contraction in GST revenues beginning March when the lockdown was imposed, this two-month trend clearly signifies a recovery is underway in the economy, the government has claimed. October’s revenues broadly pertain to economic activity that occurred in September, a month in which significant improvements were recorded in a range of high-frequency indicators, including exports and the purchasing managers’ index (PMI) for manufacturing. Only a part of that can be explained by the base effect — September 2019 had seen a dip in several indicators. Indeed, the wider unlocking of the economy in September when public transport restrictions were lifted and several sectors were allowed to operate with fewer curbs, helped. After the 23.9% collapse for the economy in the first quarter of 2020-21, the sense of relief from a string of positive numbers isn’t misplaced. The few signs that have come in about October’s economic performance suggest GST revenues could remain healthy in November too. The manufacturing PMI for October, released on Monday, has risen even higher, indicating large firms scaled up production further. India’s largest auto makers have clocked record sales in October, which incidentally should prop up the GST cess collections used to compensate States — a federal flashpoint this year.
Yet, any prognosis of a full-fledged economic recovery could still prove to be premature and illusory. Economists have reservations about reading too much into the September-October data as a sustainable trend, for it partly represents pent-up demand brewing over the months of lockdown finding expression, and partly India’s fabled festive season effect. North Block mandarins recently critiqued these ‘experts’ for their changing opinions, swinging from a doomsday scenario in June to a cynical ‘pent-up demand’ surmise when economic indicators improve. Talking up the economy is perhaps a necessary policy device at times, but equally critical is a realistic assessment of ground realities so as to prepare better for what lies ahead. One such parameter that needs attention is employment. The government has not ruled out more stimulus measures in the coming months. Much depends on the sensitivity of its evolving worldview, be it about the pandemic’s spread and control, or the most challenged sectors in the economy that still need support.
Over ₹1.05 lakh crore has been collected from the Goods and Services Tax in October, the highest monthly revenue from the indirect tax since February 2020. This marks the second successive month of a year-on-year uptick in the GST kitty — the 10.25% rise in October was preceded by a 4% increase in September. Coming on the back of six successive months of contraction in GST revenues beginning March when the lockdown was imposed, this two-month trend clearly signifies a recovery is underway in the economy, the government has claimed. October’s revenues broadly pertain to economic activity that occurred in September, a month in which significant improvements were recorded in a range of high-frequency indicators, including exports and the purchasing managers’ index (PMI) for manufacturing. Only a part of that can be explained by the base effect — September 2019 had seen a dip in several indicators. Indeed, the wider unlocking of the economy in September when public transport restrictions were lifted and several sectors were allowed to operate with fewer curbs, helped. After the 23.9% collapse for the economy in the first quarter of 2020-21, the sense of relief from a string of positive numbers isn’t misplaced. The few signs that have come in about October’s economic performance suggest GST revenues could remain healthy in November too. The manufacturing PMI for October, released on Monday, has risen even higher, indicating large firms scaled up production further. India’s largest auto makers have clocked record sales in October, which incidentally should prop up the GST cess collections used to compensate States — a federal flashpoint this year.
Yet, any prognosis of a full-fledged economic recovery could still prove to be premature and illusory. Economists have reservations about reading too much into the September-October data as a sustainable trend, for it partly represents pent-up demand brewing over the months of lockdown finding expression, and partly India’s fabled festive season effect. North Block mandarins recently critiqued these ‘experts’ for their changing opinions, swinging from a doomsday scenario in June to a cynical ‘pent-up demand’ surmise when economic indicators improve. Talking up the economy is perhaps a necessary policy device at times, but equally critical is a realistic assessment of ground realities so as to prepare better for what lies ahead. One such parameter that needs attention is employment. The government has not ruled out more stimulus measures in the coming months. Much depends on the sensitivity of its evolving worldview, be it about the pandemic’s spread and control, or the most challenged sectors in the economy that still need support.
- (light at the) end of the tunnel--सुरंग -- (phrase) – a hopeful sign/indication that a bad or unpleasant situation will end soon.
- pickup (noun) – improvement, recovery, revival, upturn.
- sustainable (adjective) – acceptable, reasonable, trustworthy, dependable (at a particular level/rate).
- mark (verb) – indicate, represent, signify, signalize, be a sign of.
- successive (adjective) – consecutive, straight, continuous.
- year-on-year (adjective) – year over year (for comparison).
- uptick (noun) –इजाफा-- a small increase or upward trend.
- kitty (noun) – a sum of something (money/things) made up of small contributions; funds, reserves, finances, resources, wealth.
- precede (verb) –पहले-- come/go before, pave the way for, lead to.
- on the back of (phrase) – as a result of, after, subsequent to; in support of.
- contraction (noun) – In economics, it refers to a decline in national output as measured by gross domestic product.
- lockdown (noun) – an emergency protocol implemented by the authorities that prevents people from leaving from a place; An extended state of confinement/encirclement/isolation of a person by the authority.
- signify (verb) – be evidence of, be a sign of, mark, signal, indicate, announce.
- underway (adverb) – in progress, happening, occurring, taking place.
- broadly (adverb) – मोटे तौर पर--generally, usually, mainly.
- pertain to (verb) – संबंिधत--concern, relate to, be connected with.
- high-frequency indicators (HFIs) (noun) – high-frequency indicators (HFIs) of India’s Economic Recovery enable a meaningful and real-time analysis of patterns of economic recovery. The HFIs provide a range of data on multiple aspects of the economy, including fertilizer sales, trade in agricultural commodities, registration of new businesses, registration of different types of vehicles, digital transactions and payments and demand for wage labour under MGNREGA.
- Purchasing Managers’ Index (PMI) (noun) – Purchasing Managers Index (PMI) is a monthly business survey data provided by IHS Markit. The monthly data are derived from surveys of senior executives at private sector companies. PMI data is used for accurate and timely insight into the health of a particular economy. The PMI data are used by financial and corporate professionals to better understand where economies and markets are headed, and to uncover opportunities.
- dip (noun) – decrease, fall/drop, reduction.
- indeed (adverb) – in fact, actually.
- unlock (noun) – a process of freeing something from restrictions.
- curb (noun) – प्रतिबंध--restraint, control/check, restriction, limitation.
- string (noun) – series, succession, chain, sequence.
- scale up (phrasal verb) – increase (in size or number).
- clock (verb) – register, record; achieve.
- incidentally (adverb) – by the way, coincidentally.--संयोग से
- prop up (phrasal verb) – support, assist, help someone/something from the decline.
- cess (noun) – a form of tax charged/levied over and above the base tax liability of a taxpayer. A cess is usually imposed additionally when the state or the central government looks to raise funds for specific purposes.
- compensate (verb) – recompense, repay, pay back, reimburse (for any revenue loss).
- federal (adjective) – संघीय-relating to a system of government in which establishments such as states or provinces share power with a national government.
- flashpoint (noun) – a situation where sudden problems could happen. (In international relations, a flashpoint is an area or dispute that has a strong possibility of developing into a war).
- prognosis (noun) – forecast, prediction, projection.रोग का निदान
- full-fledged/fully fledged (adjective) – fully established.
- premature (adjective) –असामयिक--समय से पूर्व होनेवाला-- untimely, early, too soon/too early; ill-timed, hasty.
- illusory (adjective) – imaginary, unreal, fake, bogus; misleading, misguided, untrue.
- reservation (noun) – doubt, qualm.
- read (verb) – scrutinize, look through, analyze, understand, interpret.
- pent-up (adjective) – suppressed, confined, held back, not expressed (emotions/feelings).
- pent up demand (noun) – pent up demand is a build-up of demand for goods and services in an economy where consumers are unable or unwilling to make purchases to satisfy the demand at the present time. Pent up demand happens during periods when consumers are reluctant or unable to make needed or desired purchases. This generally occurs during times of economic uncertainty – such as a recession.
- brew (verb) – develop, gather force, loom.
- fabled (adjective) – झूठा-famous, well known, celebrated.
- South & North Block (noun) – South Block is a metonym of the Prime Minister’s Office. North Block is a metonym of the Ministry of Finance, India. (The Secretariat Building (consists North & South Block) or Central Secretariat is where the Cabinet Secretariat is housed, which administers the Government of India. The South Block houses the Prime Minister’s Office, Ministry of Defence and the Ministry of External Affairs). The North Block primarily houses the Ministry of Finance and the Home Ministry). (Metonym is used as an alternative for something else with which it is closely related/associated).
- mandarin (noun) – दिग्गज-a powerful officer, civil servant, functionary/bureaucrat.
- critique (verb) – deal with, tackle, handle; criticize.
- swing (verb) – sway, oscillate, move back and forth.
- doomsday (noun) – a time of crisis.कयामत का दिन
- scenario (noun) – situation.
- cynical (adjective) – sceptical, doubtful, distrustful.निंदक
- surmise (noun) – standpoint, position, perspective.शंका
- talk up (phrasal verb) – to talk about something in a method to make it more interesting/attractive seemingly.
- perhaps (adverb) – maybe, possibly.
- at times (phrase) – sometimes, occasionally, periodically.
- assessment (noun) – evaluation, appraisal, analysis.
- ground reality (noun) – practical condition/situation.
- so as to do something (phrase) – in order to do something.
- lie ahead (phrasal verb) – be going to happen; to be in the future.
- rule out (phrasal verb) – eliminate, reject, dismiss.
- stimulus (noun) – impetus, boost, incentive, fillip.प्रोत्साहन
- sensitivity (noun) – consideration, care, thoughtfulness.
- evolve (verb) – develop, progress, advance gradually.
- worldview (noun) – beliefs, thinking, attitude, viewpoint, outlook.
- pandemic (noun) – the worldwide spread of a new disease; The illness spreads around the world and typically affects a large number of people across a wide area.
Back to school: On reopening of schools post lockdown
Reopening will prevent a washout year for students but the pandemic is not past
The most significant aspect of continued unlocking of public activity during the COVID-19 pandemic is the decision of many States to reopen schools in November. While some, such as Andhra Pradesh and Assam, have allowed pupils back on campus from November 2, many others are waiting until Deepavali to resume classes. Attendance at schools remains voluntary, since the Centre’s guidelines, which now extend until the end of November, specify that parents can decide what their wards should do. Existing regulations allow research scholars and students who have to take up practical work to resume from October 15, but colleges remain understandably cautious and want to adopt a staggered approach to reopening. India’s revitalised public sphere outside containment zones, with shops and restaurants open, and buses and urban trains on stream, is set to widen its scope as cinemas also open at half capacity. These activities will restore the sinews of the economy, but they come with the risk of exposing more people to the coronavirus. At the end of several fatiguing months of restrictions, the belief that India has crossed peak infections and reduced its transmission rate could well prompt citizens to become lax about safe behaviour — proper, universal use of face coverings, personal hygiene and distancing norms. This could pose an unprecedented risk, since children who are believed to be less affected by the infection could bring the virus home to vulnerable individuals, a phenomenon experienced after reopening schools in Israel. Minimising negative impacts during the unlock and pre-vaccine phase, therefore, requires unwavering adherence to safety protocols, and additional vigilance on the part of State health authorities who must monitor the situation in educational institutions.
Globally, reopening of schools has elicited mixed reactions, but governments have deferred to the learning needs of children in Europe where lockdowns have been reimposed due to a fresh wave of cases. In any case, data published in August show that children represented less than 5% of all infections in 27 European countries. Teachers’ unions in Britain are calling for limited classes to help disadvantaged children and those with parental commitments; public schools in many U.S. States remain closed while some private institutions have reopened; France is asking even small children to wear masks along with teachers. The consensus is to prevent crowding, mandate masks, and allow natural air to ventilate rooms. Such precautions have universal applicability as preventive measures. A reopening will revive the economy, but it need not impose a deadly price in the form of avoidable and invisible deaths among the elderly and the vulnerable.
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