After GDP data showed a lower first quarter growth, chief economic advisor Arvind Subramaniam said Indian economy now faces a new challenge in deflation. The country's annual inflation rate based on wholesale prices continued in negative in June, falling to (-) 2.4 per cent from (-)2.36 per cent in May, prompting India Inc to urge the Reserve Bank to cut rate.
Subramaniam said, “One real challenge that looms ahead appears not to be the price inflation but the possible price deflation.” Adding, “overall, economic growth is moving in the right direction, although its pace is still below what the economy needs.”
The annual rate of inflation, as per the official wholesale price index, stood at 5.66 per cent in the corresponding month of the previous year, according to data released by the commerce and industry ministry. Regarding the below-than-expected first quarter growth figures released earlier this week, Subramanian said the GDP numbers suggest that the “economy is recovering” and is consistent with the other more high-frequency indicators such as revenue collection and real credit growth.
India's economy grew 7 per cent in the first quarter of this fiscal, showing signs of slowing vis-a-vis the 7.5 per cent expansion in the quarter before. But the growth was much higher than 6.7 per cent registered in the first quarter of the last fiscal. Its indirect tax revenue in the first four months of the current fiscal (April-July) rose more than 37 per cent to over £20.10 billion, as per an official announcement.
Month on month, the July indirect tax collections grew by 39.1 per cent over that recorded in the same period a year ago. “Indirect tax revenue collections have increased from £4.08 billion in July 2014 to £5.67 billion during July 2015,” a finance ministry statement said. “Thus an increase of 39.1 per cent has been registered during July 2015 over the corresponding period in the previous year.”
