NEW DELHI: A perusal of the Union Ministry of Finance’s monthly macroeconomic report for June 2020 makes it clear that the Covid-19 pandemic has had a severe impact, adding to the miseries of the previous fiscal.
While the report cites the IMF to predict a 4.5 per cent contraction in India’s GDP in FY21 and notes that government revenues have been hit hard, it also notes that there are green shoots in a few activities.
These are power and petroleum consumption, highway transport activity, and retail financial transactions.
According to the report,electricity consumption saw lower contraction in growth rates — from (-)24 per cent in April to (-) 15.2 per cent in May to (-) 11.3 per cent in June (till June 28).
Total assessable value of E-Way bills rose 130 per cent in May 2020 (Rs 8.98 lakh crore) compared to April 2020 (Rs 3.9 lakh crore), though still below pre-lockdown levels.
The value of E-Way bills generated between June 1 and 28 stood at Rs 11.4 lakh crore.
Petroleum consumption has increased by 47 per cent in May compared to April, and the year-on-year contraction was “much smaller at (-)23.2 per cent in May as against (-)45.7 per cent in April”.
“Average daily electronic toll collections increased from Rs 8.25 crore in April to Rs 36.84 crore in May, rising more than 4 times. In the first four weeks of June, it has improved further to Rs 50.9 crore.
Total digital Retail financial transactions via NPCI platforms increased sharply from 6.71 lakh crore in April to Rs 9.65 lakh crore in May. The trend is expected to continue in June driven by a sustained pick-up in real activity,” the report said.
Economy to contract
However, it cites the IMF’s World Economic Outlook to note that all regions across the world are projected to experience negative growth in 2020, for the first time in history.
“While advanced economies are projected to contract by 8 per cent in 2020, 1.9 percentage points lower than the April forecast, growth in emerging market and developing economies has been forecast at (-) 3 per cent, a downward revision of two percentage points,” it noted, adding, “In line with downward revision of global growth, India’s growth has been forecast at (-) 4.5 per cent in 2020, a 6.4 percentage point downward revision compared to the April 2020 forecast”.
Revenue hit hard
The pandemic and the subsequent lockdowns, have had a substantial impact on government revenues in April and May 2020.
“Revenue receipts registered a negative growth of 68.9 per cent, led by negative growth in Personal Income Tax, all indirect taxes and non tax revenue. Corporation tax registered a massive growth of 1,408.1 per cent over May 2019 and stood at 2.5 per cent of BE. Personal Income Tax stood at 5.6 per cent of BE compared to 10.6 per cent till May 2019. Non-Tax revenue upto May 2020 turned out to be less than 62 per cent of the level till May 2019,” the report said.
As for expenditure side, the capital expenditure rose by 15.7 per cent relative to May last year, whereas revenue expenditure fell 1.9 per cent over May 2019 and stood at 17.4 per cent of budget estimates.
Consequently, the Centre’s gross market borrowings up to June 19 stood at Rs 2,82,000 crore, 51 per cent higher than last year — net borrowings were 12.3 per cent higher. States too, continued to be active borrowers.