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On the GST front, collections rose by 44% to ₹1,40,885 crore in June from ₹97,821 crore in the same month last year. One of the reasons is the high inflation, but the electronic invoice records also indicate an increase in volumes and, therefore, higher consumption. E-way bills stood at 73.62 million in May 2022, the third highest since the system was rolled out in 2018 and up 84% year-on-year.

Some other high-frequency data also suggests an economic recovery. Consumer durable goods IIP fell from 133 in March 2021 to 149.9 in April this year. Kotak Institutional Securities says India’s housing market has seen some recovery over the past year, with overall sales in five major markets – Bengaluru, Chennai, MMR, NCR and Pune – rising 23% over the past year. exercise 20-22.


The green shoots are visible, but so are the challenges. The most important is budget management. The May economic report from the Ministry of Finance speaks of twin deficits. “As government revenue takes a hit from the reduction in excise duties on diesel and gasoline, an upside risk to the gross budgeted fiscal deficit has emerged. current account deficit, compounding the effect of more expensive imports.This will weaken the rupee, further worsening external imbalances, creating the risk (admittedly small, at present) of a cycle of wider deficits and ‘a weaker currency,’ he says. The rupee hit record lows in July and, at press time, was trading at 79.4 to the US dollar. It fell nearly 6% against the greenback this year.

Moreover, unlike other economies, inflation in India is largely the result of supply-side issues, and using monetary policy to control it can be counterproductive at a time when growth impulses from economy point to buoyant credit demand. The government, meanwhile, will have to walk the tightrope between stability and growth. That said, North Block has taken steps to increase revenue to compensate for fuel excise cuts and increased fertilizer subsidies following the Russian-Ukrainian war. He increased customs duties on gold from 10.75% to 15%. It also imposed a tax of ₹6 per liter on gasoline and ATF exports and ₹13 per liter on diesel exports. Additionally, a tax of ₹23,250 per ton was levied on domestically produced crude oil. Windfall tax on oil companies will help him earn ₹94,800 crore, according to Moody’s Investor’s Services. RBI, for its part, has also taken steps to liberalize foreign exchange inflows to reduce volatility in the foreign exchange market.

As the Russian-Ukrainian war continues and the upward price spiral in major economies shows no signs of abating, North Block and Mint Road will need to ensure the right symphony between fiscal and monetary deals as the India needs growth as much as macroeconomic stability.