Home / Economy / These states are leading India's economic fightback

These states are leading India's economic fightback

Maharashtra, Tamil Nadu, Uttar Pradesh, Gujarat, Karnataka and West Bengal— which contribute over 50% to India’s economic output, performed in line with the rest of the country. (HT_PRINT)Premium
Maharashtra, Tamil Nadu, Uttar Pradesh, Gujarat, Karnataka and West Bengal— which contribute over 50% to India’s economic output, performed in line with the rest of the country. (HT_PRINT)

As mobility inched towards pre-pandemic levels in most states, electricity use saw an expansion for the first time in last three months, and vehicle sales saw a sizeable improvement over last month figures

India’s economic momentum appears to be picking up pace, a raft of high-frequency indicators such as PMI, exports, and GST collections show. Most states also saw an improvement on economic indicators considered in Mint’s state recovery tracker. Except for Kerala and north-eastern states, all states saw a rise in public mobility levels amid declining covid-19 cases.

Recovery across states has been swifter than last year. Due to decentralised lockdowns, supply disruptions have been less severe this year. This is reflected in the performance of key industrial states such as Maharashtra and Gujarat that have endured second-wave shocks much better than last year’s meltdown.

Although Maharashtra still has high caseloads, and mobility levels remain lower than all-India average, it reported strongest figures on electricity use and vehicle sales in July. Uttar Pradesh, which is reporting a negligible number of cases and has reached pre-pandemic mobility levels, also exhibited relatively better performance on power consumption and vehicle registration.

West Bengal trailed behind most major states on both vehicle sales and power consumption. Kerala also registered poor figures on these two economic indicators. Mint’s state recovery tracker looks at three high-frequency economic 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.

Momentum Continues

On the Covid front, July saw some improvement but not enough to preclude the risks of another wave. Compared to June, the number of fresh covid-19 cases came down marginally in July. Kerala continues to be a major outlier among major states in terms of infection rate. The pace of vaccination in India has so far been like a see-saw. After the promising rise in vaccination in June second-half, the numbers once again saw a decline in the first half of July, only to see a bump again in the last ten days.

A record 8.78 million doses were administered on the last day of the month, helping the government meet its target of 135 million doses in July. However, there are still significant regional disparities, with populous states such as Uttar Pradesh, Bihar and West Bengal lagging behind less populous peers.

Compared to pre-pandemic levels, electricity use saw a rise for the first time in the last three months. In July 2021, 121.6 billion units were consumed, an annualized growth of 2.1% over July 2019. Uttar Pradesh, with 8.1% annualised growth, reported the highest improvement among major states. Karnataka, which saw a decline of 4.1%, fared the worst. On average, medium and small states had a better showing than large states.

1.56 million vehicles were sold in July, registering an impressive 28% sequential rise, Vahan data show. However, this was still 7% lower than July 2019 figures on an annualised basis. Maharashtra was the only state to see a growth in vehicle sales over pre-pandemic levels. West Bengal, with 12% decline, had the poorest sales performance. Medium and small states fared worse than large states on this count.

Mobility Strides

All-India mobility levels crossed the 90%-mark in July, seeing an 8 percentage points improvement over June levels. Footfall in public spaces have come back to pre-pandemic levels in Uttar Pradesh, Tamil Nadu, Rajasthan and Andhra Pradesh, Google mobility data show.

Delhi has reported less than 100 cases a day for the most part of July, but the public here still seem cautious in going out. With 76% of normal levels, its mobility is the lowest among all major states. Maharashtra, with 80%, is the next lowest on the table. At 85%, Karnataka and West Bengal, are also seeing relatively low public movement. Overall, medium and small states saw a higher level of public mobility than their larger counterparts.

Several districts in north-eastern states are still seeing below 50% mobility amid a high level of infection. Some districts in Kerala are also reporting around 60% footfalls in public spaces.

Unlike last year, the largest six state economies—Maharashtra, Tamil Nadu, Uttar Pradesh, Gujarat, Karnataka and West Bengal— which contribute over 50% to India’s economic output, performed in line with the rest of the country.

Source: Road ministry
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Source: Road ministry

This augurs well for India’s economic revival this year, as these states are the key hubs of economic activity in the country. However, Covid risks have not abated yet, nor has the economy mended fully. How states contain the risk of a third wave while accelerating vaccination will be key to sustaining the current momentum.

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