Output fastest since note ban GST made doing biz easier: Jaitley

New Delhi, Dec. 1: India’s factory activity quickened in November at the fastest pace since just before the government’s surprise cash clampdown late last year, driven by a surge in new orders, a survey found.

Responding to improving demand, manufacturers cranked up output for the fourth month in a row, and hired new workers at the fastest pace in five years.

That suggests a drag on the economy caused by the shock removal of highervalue currency bills from circulation in November 2016 and the roll- out of a GST this July has faded.

November’s Nikkei/ IHS Markit Manufacturing Purchasing Managers’ Index rose to 52.6 from 50.3 in October, above all forecasts in a Reuters poll which had predicted a more modest rise to 51.0. Anything above 50 indicates growth. The reading was the strongest in 13 months.

A new orders sub- index bounced back into expansionary territory to 54.2 in November from 49.9 the month before. Export orders improved slightly after contracting in the previous two months.

The findings add to evidence that a recovery in the economy is on track. New Delhi, Dec. 1: Finance minister Arun Jaitley on Friday said the GST has made doing business easier for traders by expanding the market place and reducing tax compliance burden.

He further said that the two reforms will benefit the economy in the medium and long- term.

“GST has made doing business and trade very easy. The market size for every trader has grown. Now whole country is his market,” Mr Jaitley said while responding to questions regarding the second quarter economic growth estimates.

Reversing a five- quarter slide in GDP growth, the economy bounced back from a three- year low to expand by 6.3 per cent in July- September as manufacturing revved up and businesses adjusted to the new tax regime.

Data

showed growth rebounded to 6.3 percent annually in

The economic growth rate had slipped to threeyear low of 5.7 per cent in the first quarter of FY18.

The GST, the minister said, has also reduced the compliance burden on traders as under the new regime a trader is not required to file multiple tax returns.

The tax rates too are being rationalised and a trader will no more be required to confront inspectors, he added.

Mr Jaitley further said that impact of demonetisation in November last year was limited to one or two quarters. “The GST impact was only for one quarter mainly because of destocking. That was our assessment. The figures indicate that. Structural reforms benefit in the medium and long term. Both these steps will benefit the economy,” he said. the quarter to September, from a three- year low of 5.7 percent in the previous period.

“India’s manufacturing economy advanced on its path to recovery as disruptions from the recent tax reform ( GST) continues to diminish,” said Aashna Dodhia, economist at IHS Markit.

“Growth in output and new orders picked up to the fastest since October 2016, reportedly supported by reductions in GST rates and stronger underlying demand conditions.”

In order to help reduce the burden and confusion of the new nationwide tax on businesses, the government moved most goods which had attracted the highest rate to a band lower.

But cost pressures remained strong in November, and may push inflation to breach the Reserve Bank of India’s medium- term target of 4 per cent.

“Underlying data indicated that the central bank is less likely to adopt an accommodative stance as input cost inflation intensified to the fastest since April,” said ms Dodhia.

The RBI is likely to keep interest rates steady at its policy meeting next week, with stronger inflation expectations leaving it little room to ease, a recent Reuters poll of economists showed.