Weekly Economic Update

In the local economic news, the advance income tax collection grew by 146 per cent from a year-ago period, indicating renewed optimism on the income outlook from corporates and individuals.  

The advance income tax collection for the period ending June 15 stood at Rs 28,780 crore compared to Rs 11,714 crore, a year ago. While corporate tax accounted for Rs 18,358 crore, personal income tax stood at Rs 10,422 crore. According to some analysts, the increase in direct tax collections can be attributed to ‘healthy exports and a continuation of various industrial & construction activities, given the lower stringency of the staggered regional lockdowns in 2021 vs the nationwide lockdown in 2020.’  

In other news, Financial Conditions Index (FCI) moderated during the second quarter of CY 2021 due to the impact of the second wave of COVID-19. The index continued to point toward optimism with a reading of 59.1 (any reading above 50 indicates optimism about the business outlook). However, the reading was down from a level of 72.1 during the previous quarter, signalling moderation. In a notable point, 76.7 per cent of survey respondents expect non-food credit growth of over 10 per cent in the medium term.   

Also, average daily air passenger numbers tripled from the third week of June to a pace of 1.25 lakh passengers from 42,000 in May. However, the average daily passenger numbers are still down from the pace of 3.13 lakh passengers in the month of March.  

In the global economic & market news, even as growth accelerated in the Eurozone with Eurozone PMI reading for June at a level of 59.2 (highest in 15 years), the European stocks took a breather as the benchmark, STOXX Europe 600 ended 0.6 per cent lower on Wednesday. In other prepared remarks before the US congress, the US central bank i.e. Federal Reserve Chief Jerome Powell noted that the US economy was on a firm footing even as the pandemic remained a concern. He also reiterated the view that the current bout of inflation in the US remains a transitory phenomenon.