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Business News/ News / India/  State Recovery Tracker: Rajasthan, Delhi led economic recovery in July
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State Recovery Tracker: Rajasthan, Delhi led economic recovery in July

A few large state economies that may have seen off the worst of the pandemic are showing early signs of economic revival

Road transport ministry’s dashboard recorded about 1.13 million vehicle registrations in July—still only 63% of the year-ago level. ( Ramesh Pathania/Mint)Premium
Road transport ministry’s dashboard recorded about 1.13 million vehicle registrations in July—still only 63% of the year-ago level. ( Ramesh Pathania/Mint)

In early June, the Centre left lockdown orders to the states with the hope to kickstart economic recovery. The effect has been mixed across different states, partly due to their varying approaches to tackle the pandemic. While the picture looked the brightest for Rajasthan and Delhi in July, it was a mixed bag for other large state economies, shows Mint’s new State Recovery Tracker.

Some key indicators showed an uptick in states where the virus situation has improved. But regions where it deteriorated—Karnataka, Andhra Pradesh and Kerala—pulled back on economic recovery, too. Google data showed a clear link between the outbreak and public movement in 17 of the 20 high case-load states last month.

Public movement is one of the high-frequency indicators in the recovery tracker. Three other indicators, which serve as proxies for economic activity - electricity consumption, goods and services tax (GST) collections, and vehicle sales - are also considered in the tracker. The tracker looks at the 12 largest state economies individually (each having at least 4% share in India’s gross domestic product or GDP), and clubs mid-sized economies (2–4% of India’s GDP) and small ones (1–2% of India’s GDP).

Rajasthan was the only state where all indicators on the tracker showed an improvement since June levels. Karnataka and Andhra Pradesh were the only ones where all available data points show a dip in activity.

Nationally, public mobility was about 60% of the par level in the last week of July, down from 64% at June-end. Mobility improved the most in Tamil Nadu and Delhi. Bihar, West Bengal, and Kerala saw the biggest declines since June levels. Mobility refers to Google footfalls data at groceries and pharmacies, workplaces, parks, transit hubs, and retail and recreation spots. The comparison has been made with the baseline period of 3 January to 6 February, 2020.

On electricity consumption, mid-sized and small-sized state economies managed to surpass the levels of the year-ago period, data from the National Load Despatch Centre showed. Among large states, Telangana, Madhya Pradesh and Rajasthan did the same, possibly due to the slower virus spread than earlier. The rest of the country remained 2.1% lower on this indicator.

Though still in negative territory, the national figure reflects a recovery since June, when power consumption was 11% lower than the year-ago period.

The road transport ministry’s dashboard recorded about 1.13 million vehicle registrations in July—still only 63% of the year-ago level. Mid-sized economies were able to match 65% of the year-ago vehicle registration numbers, and small-sized ones climbed up to 70%. Richer states such as Tamil Nadu (62% of year-ago levels), Maharashtra (61%), and Karnataka (51%) are far behind.

Most states saw a sharper fall in GST collections compared to year-ago levels in July. From a 3% year-on-year decline in June, the national figure fell back to 14% in July, the latest figures from the finance ministry showed. Mid-sized and small-sized economies were at around 85% of the year-ago GST collections. Rajasthan led the way with 104%, while Karnataka declined from 101% in June to 84% in July.

Enforced lockdowns could soon run their course as a pandemic mitigation strategy. Moving ahead, the link between the disease and economic revival could only strengthen, as illustrated best by Delhi and Kerala. Delhi has largely controlled the outbreak since June, and 92% of its patients have been discharged. As a result, it is one of the few states where mobility rose in July. Power consumption and vehicle sales have also improved since June.

Kerala’s outbreak has intensified in recent weeks. And so, its mobility level suffered one of the worst declines among states last month, with other indicators mirroring the same trend.

Two large state economies—Karnataka and Andhra Pradesh—start August in the worst shape: their covid-19 deaths curves have been steep lately, and the virus is not relenting. For other large state economies, mainly Delhi, Gujarat and Telangana, economic recovery could pick up pace.

Though the national economy will get a fillip from recovering large states, the warning is clear for smaller state economies. Despite performing better in previous months, they could fall behind if they do not tame fresh outbreaks soon. As is now clear, revival is possible even after a high case-load, and shutdowns can again cripple states that had once appeared to be flattening their curve. The health and economic battles must go hand-in-hand.

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ABOUT THE AUTHOR
Tanay Sukumar
Tanay leads Mint's data journalism team. His role involves editing and overseeing the newspaper's diverse data offerings, ranging from deep analytical pieces (in the daily "Plain Facts" section) to bite-sized social media charts.
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Published: 03 Aug 2020, 01:53 PM IST
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