The Signal (weekly highlights)

1. Manufacturing PMI rises to 56.4 in July 2022

The seasonally adjusted S&P Global India Manufacturing Purchasing Managers’ Index (PMI) jumped once again to 56.4 in July 2022, after declining to 53.9 in June 2022. This is the highest reading of the PMI in the last eight months. It is also the 13th consecutive month when the manufacturing activity has shown an expansion.

A PMI reading above 50 denotes expansion and below 50 denotes contraction. Manufacturing units reported a growth in new business and output in July 2022. The growth was spread well across sectors, with investments goods doing particularly well. Companies increased input purchases in response to the rising demand.

2. Government collects Rs.1.5 trillion GST in July 2022

The government collected nearly Rs.1.5 trillion goods and services tax (GST) in July 2022. This was higher than the Rs.1.4 trillion collections made in June 2022. Compared year-on-year, GST collections were higher by Rs.326 billion or 28 per cent in July 2022.

Monthly GST revenues have been more than Rs 1.4 lakh crore for five straight months. The growth in GST revenue till July 2022 over the same period last year is 35%.

3. Overall government capex surge by 57% during April-June 2022

Of the Rs.7.5 trillion capital expenditure (capex) budgeted for 2022-23, the government spent more than Rs.1.8 trillion during April-June 2022. This is over 23 per cent of the budget estimate against 20 per cent during the corresponding period of last fiscal.

The overall government capital expenditure witnessed a growth of 57 per cent during the first three months of the fiscal. Among key infrastructure sectors, capital expenditure on roads witnessed a growth of 72 per cent to more than Rs.807.2 billion, while capex was Rs.461.2 billion on railways, showing a growth of 80.1 per cent.

4. Passenger vehicle sales continue to be strong in July 2022

Domestic passenger vehicle sales continued to be strong in July 2022 on the back of an improvement in the supply of semiconductor and healthy demand for newly launched vehicles.

Going forward, the demand from Compact SUV segment and mid-level SUVs are expected to drive overall sales for the passenger vehicle industry.

5. RBI hikes policy rate by 50 basis points

The Reserve Bank of India’s Monetary Policy Committee (MPC) on Friday announced a 50 basis point hike in the repo rate to 5.40 per cent, citing continued upside risks to inflation. The Standing Deposit Facility (SDF) rate is now at 5.15 per cent, while the Marginal Standing Facility (MSF) Rate stands at 5.65 per cent. The SDF represents the lower band of the interest rate corridor and the MSF the higher.