Economic activity shows steady performance, FY23 GDP growth expected to surpass 7%: PHD Chamber

PR  No.- 353

8 December,2022

New Delhi

PHDCCI Economy GPS Index 

Economic activity shows steady performance, FY23 GDP growth expected to surpass 7%: PHD Chamber

Economic activity of the foregoing months has shown steady momentum on the back of positive consumer demand and diminishing global economic uncertainties, said Mr Saket Dalmia, President, PHD Chamber of Commerce and Industry, in a press statement issued here today.

The PHDCCI Economy GPS Index for November 2022 remained steady to 143.4 as compared to 145.5 in October 2022, 145.0 in September 2022, and 141.0 in August due to buoyancy in consumption patterns and softening inflation, said Mr. Saket Dalmia.

PHDCCI Economy GPS Index captures the momentum in supply side business activity through growth in GST collections, demand side consumer behaviour through volume growth in passenger vehicle sales and sensitivity of policy reforms and impact of domestic and international economic and business environment through the movement of SENSEX at the base year of 2018-19=100, said the Industry Body.

As GPS index is in a steady momentum and holds significant correlation with economic growth, we expect FY23 GDP growth to surpass 7%, said Mr. Saket Dalmia.

Demand trajectory in the economy remains intact as passenger vehicles, with compact cars and utility vehicles, grew 3,10,580 in November 2022 from 2,15,626 in November 2021 marking a whooping 44% Y-o-Y growth as compared to November 2021.

Supply side indicator, GST, is showing robust performance as the gross GST revenue collected in the month of November 2022 at ₹ 1,45,867 crore is 11% higher than the GST revenues in the same month last year, said Mr. Saket Dalmia.

Policy environment in the country remains attractive as the sequential growth of SENSEX (average of daily close) has shown M-o-M growth of 5.0 percent in November 2022 as compared to its corresponding value in October 2022, said Mr. Saket Dalmia.

Economic so far (Sequential)

Source: PHD Research Bureau, PHD Chamber of commerce and Industry

 Economic so far (Y-o-Y)

Source: PHD Research Bureau, PHD Chamber of commerce and Industry

PHDCCI Economy GPS Index has been consistently remained above 140 levels since August 2022 which shows a positive momentum for the economic activity, said Mr. Saket Dalmia.

Chart 1: GPS Index Monthy Trend Chart 2: Movement of GDP and GPS over the quarters

Source: PHD Research Bureau, PHD Chamber of commerce and Industry

The pace of economic activity showed momentum on the back of strong demand side, supply side and investments supported by the various structural reforms undertaken by the Government during the last 3 years.

Despite global headwinds, the Indian economy is projected to grow at 6.9% by the World Bank. However, we are hopeful that economic growth will surpass 7% in the current financial year supported by the resilient demand conditions and improving supply side. RBI recently started slowing the rate hikes with a hike by only 35 basis points to 6.25% in order to control retail inflation and maintain economic growth, said Mr Saket Dalmia.

Going ahead, continued hand holding by the Government is required to mitigate the impact of recent geo-political developments while maintaining a balance between inflation and economic growth, said Mr Saket Dalmia.

PHD Chamber of Commerce and Industry (PHDCCI) Economy GPS Index is a composite index of 3 lead economic and business indicators with base year at 2018-19=100, which measures the broad economic and business activity. The PHDCCI Economy GPS Index, based on the monthly values of three high frequency indicators viz., GST collection (Rs. Crore), Passenger Vehicle Sales (units) and SENSEX (daily average), helps to find the direction of the economy. The three broad indicators represent not only demand and supply in the economy but also revenue growth of the government and movement of financial markets in the country. GST collections indicate the momentum of business activity, passenger vehicle sales is a broad indicator of demand activity in the economy and movement of SENSEX indicates the mood of both domestic and foreign investors.

Table 3: Movement of Economy GPS over the months

Source: PHD Research Bureau, PHD Chamber of commerce and Industry