PremiumEven as data on trade, manufacturing (PMI), and GST collections suggest a pick-up in economic recovery in the New Year, other high-frequency indicators point to a plateauing of economic activity in India.
Power consumption rose at nearly the same year-on-year pace in January (5.1%) as in December (5%). Vehicle registrations declined 11% year-on-year in January after registering a nearly double-digit jump the previous month. Even public mobility levels fell in January compared to the previous month.
Most worryingly, the biggest state economies continue to lag others in economic recovery, the latest update to Mint’s state recovery tracker shows. The smallest state economies saw year-on-year growth in both vehicle sales and power consumption last month but several of the bigger states either saw a decline, or witnessed muted growth.
Public movement, electricity use and vehicle sales are the three indicators of economic activity considered in the recovery 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).
West Bengal was the only one among the top six state economies that saw a year-on-year rise in electricity consumption as well as vehicle registrations in January. Despite a rising covid case count, Kerala too recorded slight growth on both indicators, and had the best mobility levels among large states. Karnataka and Tamil Nadu fared the worst, with electricity use and vehicle registrations declining on a year-over-year basis.
The top six state economies - Maharashtra, Tamil Nadu, Uttar Pradesh, Karnataka, Gujarat, and West Bengal - together account for half of the country’s gross domestic product (GDP) are key to India’s economic revival. Average mobility in these six states was slightly worse than the national average. The drop in vehicle sales was slightly higher, and the rise in power consumption much more muted than in other states.
Peak power demand touched a new high in January, with a demand of 189.6 gigawatts on 30 January surpassing previous records. This reflected in total electricity consumption during the month, which saw a 5% rise from January last year.
But the six largest state economies saw only a 2% rise in power consumption. Tamil Nadu and Karnataka were the main laggards among the big states. Maharashtra and Gujarat both saw a 6% year-on-year growth in their electricity usage, the highest growth among the top six state economies. The rest of India witnessed a more impressive surge (8%) in power consumption.
Overall mobility levels were lower in January than in December, Google data shows. But this could largely be a holiday effect. The biggest dips in January were observed in tourist states. In Himachal Pradesh for instance, public movement had reached 109% of normal in December, but scaled back to 95% last month. In Uttarakhand, it declined from 107% to 97%, and from 92% to 87% in Goa. Mobility levels in January were higher than in November for most states. Smaller states saw much higher mobility levels than bigger ones on average.
The mobility data suggests that people are gradually returning to their workplaces across India. In January, the extent of footfalls at offices were 84% of pre-pandemic levels, compared to 81% in December-end, signalling a further revival of business activity. District-level data presents a somewhat uniform level of mobility compared to a few months ago, when southern states were consistently lagging the north.
Vehicle registrations dropped across India, especially in some of the bigger states. Gujarat (34% drop) and Karnataka (20% drop) had the worst vehicle sales performance, continuing their trend of the previous month.
The latest numbers suggest that the pace of economic recovery still remains uneven, with some of India’s key regional growth engines yet to pick up steam.
