In July 2022, India's monthly goods and services tax (GST) collection has seen the second highest result ever. Furthermore, in July, manufacturing activity reached an eight-month high. These factors have been encouraging for investors in India as the economic recovery has seen strong momentum while the interest rates were raised. Several other indicators which include fuel sales, power demand, railway freight, and car sales have also been on the rise demonstrating economic strength, despite soaring inflation affecting several sectors of the Indian economy.
The Indian Finance Ministry in its release of July’s economic data announced that the "GST collections rose 28% to ₹1.49 lakh crore in July on the back of economic recovery and measures taken to curb tax evasion". Moreover, the seasonally adjusted S&P Global India Manufacturing Purchasing Managers' Index (PMI) rose to 56.4 in July from 53.9 in June following a major increase in business orders.
Nevertheless, the divergence in India's headline PMI relative to the rest of the region suggests the resiliency of India's domestic demand recovery and despite the weakening of global growth, it is expected that India's domestic growth will remain reasonably robust. Data released last week showed the manufacturing sector grew 12.7% in June though it slowed from 18.1% in May.
Moreover, the country's largest passenger car manufacturer Maruti Suzuki reported an 8.3% increase in July YoY. Power consumption remained steady at 129 billion units in July though the increase from a year ago was only 2.9% because of the high base of last year.
Lastly, petrol and diesel sales rose 12% and 18%, respectively, in July over last year as economic activity expanded, though the low base was the reason for such results. "The PMI numbers and the GST inflows point to a robust momentum of economic activity in spite of the global headwinds," said ICRA chief economist Aditi Nayar.
At PHC Advisory, we can offer your business in India all the necessary support related to bookkeeping, treasury, tax compliance, and other related solutions to navigate and fully comply with the complex Indian regulations. We constantly monitor the regulatory and fiscal updates in the Indian market and if you would like to know more about the most recent tax developments, please contact us at firstname.lastname@example.org.