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India Services Sector Activity Rises to Five-Month High in December

Professor of Financial Economics and Part-time Value Investor, Transfin.
Jan 4, 2020 5:30 AM 2 min read

India's services sector activity rises to five-month high in December.




India's services sector activity rises to five-month high in December.

On A Rising Tide: India's services sector activity rose to five-month high in December, propelled by new business orders that boosted output as well as employment.


The IHS Markit India Services Business Activity Index improved from 52.7 in November to 53.3 in December, raising hopes of an economic recovery. Firstpost


The news come on the heels of the manufacturing PMI data released last week, which showed that India's factory activity accelerated at the fastest pace in seven months in December.


Power of Habit: Goods and Services Tax (GST) collections in December accelerated to cross the 1trn mark for the second consecutive month, up 8.9% Y-o-Y, and changed GST Council norms for claiming input credit may have contributed to the increase in collections.


The changed norms mandate companies to match their purchase invoices with those uploaded by their vendors. Input credit claims have been limited to 20%, which is now further reduced to 10%, where details are not uploaded by suppliers. As a result, a larger number of companies have to upload GST returns with corresponding invoices into the system. This led to an increase in GST returns filed in December for sales in November, from 7.2 million a year ago to 8.1 million now.  


Now while this might be a welcome news, it needs to be noted that GST collection trends will have to be increased and sustained in a similar fashion in the next few months to come in order to bridge an increasing fiscal gap.


FYI: The fiscal deficit has inched up to 115% of the budget estimates until November. Livemint


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