High costs of inputs will have impact on demand and production possibilities: PHD Chamber

No. PR- 119

October 6, 2021

New Delhi

 PHDCCI Economy GPS Index September 2021

High costs of inputs will have impact on demand and production possibilities: PHD Chamber

Although, the economic activity remained intact in September 2021, high cost of inputs vis-à-vis skyrocketing international commodity prices, shortages of containers and unavailability of some raw materials, such as semi-conductors, will have impact on the demand and production possibilities in the coming months, said Mr. Pradeep Multani, President, PHD Chamber of Commerce and Industry, in a press statement issued here today.

The prices of the basic raw materials have been increased by more than 50% during the last 1 year and they are posing a challenge to the small businesses to operate as these impact their costs of production and affect their competitiveness in the domestic and international markets, said Mr. Pradeep Multani.

The PHDCCI Economy GPS Index for September 2021 has decreased to 116.2 as compared to 116.7 for August 2021 (Base year 2018-19 = 100). The sequential growth of SENSEX (average of daily close) has increased by 6.4% from 55238 in August 2021 to 58781 in September 2021. The sequential growth of GST collections increased by 4.5% from Rs. 1,12,020 crore in August 2021 to Rs. 1,17,010 crore in September 2021. However, the sequential growth of passenger vehicles declined by (-)20.1% in September 2021 from 232224 units in August 2021 to 185636 units in September 2021, said Mr. Pradeep Multani.

Economic recovery so far (Sequential)

Source: PHD Research Bureau, PHDCCI Economy GPS Index

The PHDCCI Economy GPS Index during the period April–September of FY 2021-22 stands at 112.6 as compared to 73.5 for April–September FY 2020-2021. The PHDCCI Economy GPS Index at 116.2 for September 2021 is higher by 16.0 points from the Economy GPS Index for September 2020 at 100.2, said Mr. Pradeep Multani.

Economic recovery so far (Y-o-Y)

Source: PHD Research Bureau, PHDCCI Economy GPS Index

PHDCCI Economy GPS Index has shown sharp recovery from the lows of 39.6 for April 2020 to 124.3 for April 2021, 91.5 for May 2021 as compared with 50.1 for May 2020, 107.5 for June 2021 as compared with 75.1 for June 2020, 119.7 for July 2021 as compared with 85.6 for July 2020, 116.7 for August 2021 as compared with 90.5 for August 2020 and 116.2 for September 2021 as compared with 100.2 for September 2021.

Source: PHD Research Bureau, PHDCCI Economy GPS Index.

At this juncture, there is a need to address the high commodity prices and shortages of raw material to support the consumption and private investments in the country, said Mr. Pradeep Multani.

The drivers of household consumption needs to be further strengthened to enhance the aggregate demand as it will have an accelerated effect on expansion of capital investments, said Mr. Pradeep Multani.

More and more direct benefit transfers needs to be considered for the urban and rural poor under the various welfare schemes in addition to the free distribution of dry rations till Diwali as already announced by the Hon’ble Prime Minister, said Mr Multani.

Vaccination of population should be continued with a more faster pace, let’s target to vaccinate at least half of the population with both the doses by end October 2021, said Mr. Multani.

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 are representing 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 broad indicator of demand activity in the economy and movement of SENSEX indicate mood of both domestic and foreign investors.

Movement of Economy GPS over the months

Source: PHD Research Bureau, PHDCCI GPS Index

End

Media Division

PHD Chamber of Commerce and Industry