The amount of GST collection in July was Rs 1.65 lakh crore. The collection is 11 percent more than July last year. The news is undoubtedly promising.
Especially, the festive season has not yet started in India. In the next three-four months, it is normal to see a further increase in the amount of shopping on the occasion of the festival.
As a result, consumer spending can be expected to remain buoyant unless there is a sudden crash.
The world economy is currently in a deep state of uncertainty. In this situation, if the Indian market is strong, then the international capital can also move towards India.
However, considering this news as an indication of the overall good health of the Indian economy would be a mistake. Inflation rate is on the rise again – In July itself, the rate of inflation of the price of retail goods crossed the six and a half percent mark again.
Grain prices are still not fully under control, fuel prices are causing concern in the global market.
There is also the long-term problem of insufficient growth in capital expenditure in India.
It is clear from the Reserve Bank’s cautious stance that even if interest rates are not raised for the time being, chances of lowering them in the near future are slim.
The employment picture is also not promising. That is, all the concerns that the financial system had, are more or less current.
Yet it is significant if demand is created in the consumer goods market. Because consumer goods are the most important component of national income, and if that demand is sustained, it can have a positive impact on other sectors of the economy.
Where is this demand coming from? Finding the answer to this question will ultimately lead to India’s uneven economic development.
The rate of financial growth for the economy as a whole is an average figure—it has no way of telling how a class of people are faring.
A breakdown of growth rates by financial status shows that over the last half-century, the financial growth rate of the poorest has always been lower than that of the richest financial class.
The word is significant. In the case of those whose income is 1000 taka, it is enough to increase the income by 100 taka to bring about a ten percent increase; But a person whose income is Rs 1 lakh needs Rs 10,000 to increase his income by ten percent.
That is, the income of poor people can increase with much less effort compared to the government. India has apparently not even attempted that.
Other statistics suggest that, The real purchasing power of a large section of people had declined before the outbreak of the pandemic.
The subsequent ‘financial recovery’ did not increase their purchasing power. That is, the basis of the demand seen in the consumer goods market is not broad enough.
As a result, the question remains as to whether that growth can be sustainable at all. The importance of services as an economic sector has increased over the last three decades, the importance of agriculture has declined at the beginning of this period but has remained at a certain level for at least ten years.
On the other hand, the importance of industry also increased initially and then stagnated.
Consequently, it is necessary to find out whether the growth narrative stands on shaky foundations. That question remains.
The importance of services as an economic sector has increased over the last three decades, the importance of agriculture has declined at the beginning of this period but has remained at a certain level for at least ten years.