Basic raw material prices have increased by more than 50% in one year
There is a need to further fuel the drivers of household consumption and private investments to enhance the aggregate demand in the economy as it will have an accelerated effect on expansion of capital investments in the country, said Sanjay Aggarwal, President, PHD Chamber of Commerce and Industry, in comments on the national economy which was seen consolidating in August 2021.
“The Government should frontload the National Infra Pipeline expenditure as increased spending on infrastructure will give a multiplier effect to rejuvenate the aggregate demand in the economy. Undoubtedly, robust growth of infrastructure is the key ingredient to realize the vision of Aatmanirbhar Bharat,” he said in a release on 6 Sept 2021.
The economic activity, which increased at a significant pace from May to June and June to July, is consolidating now as PHDCCI Economy GPS Index for August 2021 has only increased to 119.9 as compared to 119.7 for July 2021 (Base year 2018-19 = 100).
The supply side issues such as reduced price cost margins vis-à-vis high cost of raw materials, shortages of containers and unavailability of some raw materials are impacting the production possibilities and sales volumes, he pointed out.
The prices of the basic raw materials have increased by more than 50% during one one year. High commodity prices are posing a serious challenge to the small businesses to operate as these impact their cost of production and affect their competitiveness in the domestic and international markets, said Aggarwal.
The PHDCCI Economy GPS Index during the period April–August of FY 2021-22 stands at 112.6 as compared to 68.2 for April–August FY 2020-2021.
PHDCCI Economy GPS Index at 119.9 for August 2021 is higher by 29.4 points from the Economy GPS Index for August 2020 at 90.5.
On the back of supportive Government policies, Aggarwal expects strong business confidence, positive consumer sentiments and anticipated high demand amid upcoming festive season, leading to economic and business indicators to improve in the coming months.
PHDCCI Economy GPS Index has shown sharp recovery from the lows of 39.6 for April 2020 to 124.3 for April 2021, 91.5 for May 2021 as compared with 50.1 for May 2020, 107.5 for June 2021 as compared with 75.1 for June 2020, 119.7 for July 2021 as compared with 85.6 for July 2020 and 119.9 for August 2021 as compared with 90.5 for August 2020. #economy #investment #banking #manufacturing #exports /fiinews.com
