Rise In Consumption Driving India’s Economic Growth, Finds ASSOCHAM Study; Gujarat, Maharashtra, Karnataka Lead The Way

The Associated Chambers of Commerce and Industry of India (ASSOCHAM) disaggregated the GST data and derived that public consumption is indeed driving the turnaround of the Indian economy.

Moreover, states like Gujarat, Rajasthan, West Bengal and Tamil Nadu are leading this process. 23 states and union territories recorded a positive GST revenue collection trend in February, which highlights that consumption is shooting up.

Gujarat has emerged as one of the topmost states in terms of consumption and even collected 14 per cent higher GST revenue on a year-on-year basis in February 2021.

Bagging Rs 16,103 crore combined GST revenue in February 2021, Maharashtra is the largest consumption state. However, large base meant that its annualized GST growth was slightly on the lower side. Karnataka and Maharashtra registered a two per cent annual expansion in these numbers last month.

Deepak Sood, General Secretary of ASSOCHAM, told TOI, “The consumption story is catching up with the trend being led by manufacturing, FMCG, chemicals, fertiliser, real estate and construction with a major positive impact on industries such as steel and cement. Once the capacity utilisation reaches to the fullest, the investment wheel of the economy too would pick up momentum, giving further traction to the economy.”

Sood added that high-frequency data along with important figures of the GST collections further solidified ASSOCHAM’s assessment of a V-shaped economic recovery in FY’22.

Additionally, states like Madhya Pradesh, Chhattisgarh, Jammu and Kashmir, Haryana, Punjab, Sikkim, Jharkhand, Odisha, Arunachal Pradesh, Himachal Pradesh, Tamil Nadu have shown a rapid revival in consumption. However, Goa, whose economy is largely dependent on tourism, has failed to pick up pace and registered a drop in this factor.

The report mentions that the expanding Covid-19 vaccination campaign will assist the services sector to return to growth in the coming quarters.