With mobility levels shrinking to May 2020 levels, economic activity appears to have come to a halt last month. Electricity use declined for the first time in six months, whereas vehicle sales recorded the worst showing since June 2020.
India’s economy began the month of May with a cloud of uncertainty: by April’s last week, most states had gone under fresh covid-19 lockdowns. The second wave has since peaked but the fear factor kept curbs in place throughout the month. The economic cost is now clear across the country, rich and poor states alike, several high-frequency indicators show in the latest monthly update to Mint’s state recovery tracker.
Public movement declined drastically, reaching the same levels as in May last year, when the country was under even stricter nationwide curbs. Just about 1.2 million e-waybills were generated per day on average, a one-year low and down from around 2 million in April. Electricity consumption had its first decline in 2021 as compared to pre-pandemic levels, while vehicle registrations also went down by an annualized 46% since the same month two years ago.
A two-year timeframe is considered for electricity and vehicles data, with May 2019 as the reference period. This helps avoid the base effects in comparison with the artificially depressed levels of May 2020, when most economic indicators had collapsed.
By the second half of May, India’s curve of daily covid-19 cases was going downward, but most states either continued with the lockdowns or allowed limited exemptions as they chose to stay cautious amid scanty vaccine supplies.
Gujarat, which eased its lockdown earlier, fared better than all other major states. Karnataka and Tamil Nadu, where covid-19 cases peaked later, have lagged. Delhi had the poorest economic performance and the worst decline in mobility levels among all states despite bending its covid curve by early May.
Mint’s state recovery tracker looks at three high-frequency indicators—electricity use, vehicle sales, and mobility levels—to keep track of the performance of the largest state economies (those with at least 4% share in India’s gross domestic product or GDP). Mid-sized economies (2-4% of India’s GDP) and small ones (1-2% of India’s GDP) are aggregated for this analysis.
Only 536,795 vehicles were registered across India in May, a sharp decline from 1.8 million in May 2019, shows the Centre’s Vahan dashboard. Sequentially, this was 57% lower than April figures. Delhi, with a 97% annualized drop, was the worst on this indicator, followed by Karnataka (78%) and Tamil Nadu (62%).
Uttar Pradesh and Gujarat, which are well past their second-wave peaks, reported relatively smaller declines—24% and 35%, respectively.
The country consumed 110 billion units of electricity in May, lower by an annualized 4.6% since May 2019, data from the National Load Despatch Centre shows. The contraction, the worst since December 2020, was seen across all states. Andhra Pradesh (-1.4%), Maharashtra (-1.9%), and Madhya Pradesh (-2.3%) had a weaker decline than the national average. Delhi, with 17% annualized contraction, experienced the worst drop, followed by Kerala (-10.1%). West Bengal (-8.9%) and Uttar Pradesh (-8.7%) also saw a considerable downturn in their electricity use.
Mid- and small-sized states experienced a relatively smaller contraction in their electricity consumption in May.
Public mobility has declined by about 8% since April-end, reaching 55% of pre-pandemic levels by the end of May, shows latest Google data. With 37% of pre-pandemic footfalls at public spaces, Delhi fared the worst, closely followed by Karnataka (40%). Mobility was around half of the normal levels in Tamil Nadu, West Bengal, Rajasthan, Telangana, Madhya Pradesh and Kerala.
In Gujarat and Uttar Pradesh, public mobility is now nearly 70% of normal, despite differing lockdown durations.
As the pandemic still surges in the south and north-east, these regions continue to see restricted public movement. Parts of Odisha and Himachal Pradesh, considered mid-sized states in the tracker, also reported significant declines in mobility.
In the second wave, rural parts in smaller states bore the brunt in May as larger states saw their infections peak earlier. This reflected in the differential economic impact: the top six state economies, which had lagged in 2020, performed in line with the rest of India in May.
Any national recovery will hinge on how well the biggest states do in the coming weeks. The top six states—Maharashtra, Tamil Nadu, Uttar Pradesh, Gujarat, Karnataka and West Bengal—contribute over 50% to India’s economic output.
The lockdown of 2020 left a long trail of economic downturn, but the latest GDP data shows the impact was waning till the second wave struck. Further recovery will be led by how quickly Indians come out of the devastating emotional and financial cost of the second wave. With the lockdown set to continue in key large states, that stage could be some time away.
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