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India’s economic momentum seems to be on a strong footing even as the country’s ambitious vaccination drive picks up pace, bringing hope, and raising mobility levels across the country. With just six out of 16 high-frequency indicators in the red, Mint’s macro tracker showed a tinge of continuity in the positive direction for the first time in months. Exports saw meaningful growth for the first time since September, headline inflation eased further, and the industrial sector saw an uptick in activity.

As the government steps on the gas on public spending in the final quarter of the fiscal, we may expect the economy’s report card to look brighter in the coming months. Beyond that, much will depend on the success of the vaccination drive and the ability to contain a fresh wave of covid infections.

Of the 16 high-frequency indicators considered in the macro tracker, six were in the green in January, or above their five-year-average growth trend. Six were in the red, or below the five-year average growth. The rest maintained the trend. Launched in October 2018, Mint’s macro tracker provides a monthly state-of-the-economy report based on trends in 16 high-frequency indicators across four segments: consumer economy, producer economy, external sector, and ease of living.

The tracker had recorded a historic plunge in April 2020, when 13 of the 16 indicators turned red. Intermittent signs of progress in the second half of 2020, led by the consumer and producer economy segments, have helped the tracker move up since then. With just six indicators in the red, the last two months had the best showing so far since the pandemic began.


In January, the number of passenger vehicle dispatches was the only indicator in the consumer economy segment to see a decline. After registering consistent year-on-year increases since the lockdown ended, dispatches declined 1.5% in January. However, in sequential terms, the performance was the best in three months as domestic car dispatches crossed 150,000 for only the third time since the pandemic began.

As in previous months, tractor sales saw robust growth in January. The two other consumer economy indicators—broadband subscriber base and domestic air travel demand—remained far below their five-year average trends. But the consistent uptick in air travel in recent months continued, with domestic airlines carrying over 7.7 million passengers in January, shows civil aviation ministry data. At 60% of the year-ago level, this is the best so far during the pandemic.

The producer economy segment stayed partly green, aided by a continuing expansion in the composite Purchasing Managers’ Index (PMI). At 55.8, the index was well over the 50-mark for the fifth straight month. A reading above 50 shows month-on-month expansion in activity.

Rail freight traffic, a proxy for manufacturing activity, was 8.7% higher than a year ago, the sixth straight month of growth.

Data for the other two indicators that gave modest readings are available with a month’s lag. Output in the eight core infrastructure industries was no longer in the contraction zone for the second straight month in December 2020. Non-food credit extended by banks grew only 5.9%—similar to previous months but still one of the weakest in three years.

Growth in the external sector was led by merchandise exports, which rose 6.2% year-on-year. This was the best export growth figure since March 2019, eclipsing the 6% rise in September 2020. But major labour-intensive sectors, such as gems and jewellery, and leather products, continued to lag, as their exports fell 4.1% on year. This indicates that the stress in the labour market continues.

The ease of living segment of the macro tracker showed improvement in the new year, leaving behind the bleak shape it had been in since the early months of the pandemic. A long due slump in food prices helped headline inflation ease to a 16-month low of 4.06%. But core inflation, which excludes food and fuel prices, remained sticky, and was in the red in January.

Inflation is likely to remain soft for now, said analysts at ICICI Securities in a report dated 14 February, citing a robust winter harvest and early signs of normal monsoon, which could offset the effect of rising global food prices.

Another sharp improvement came in the job outlook assessed by the RBI’s quarterly industrial survey. Results published on 5 February showed a net 3.9% respondents optimistic about the employment scenario in the October-December quarter. This is the best survey result in six quarters, and the first time during the pandemic that more respondents were positive than negative on jobs.

All in all, most key economic indicators were looking upwards, if not rising rapidly, in January. If the covid scare is contained and vaccine hesitancy is tackled effectively, the economy could get back on track earlier than expected.

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