As Unlock 1.0 entered third week, the Centre sounded optimistic saying green shoots were visible with rise in economic activity and improvement in economic indicators. The finance ministry has released various sectoral figures to indicate a pick-up in the economic activity, which had come to a standstill during the more than two-month long lockdown period.
India’s PMI (purchasing manager's index) Manufacturing and Services showed lower contraction in May at 30.8 and 12.6 respectively, compared to April (27.4 and 5.4). Similarly, the electricity consumption saw lower contraction in growth rates from (-)24 per cent in April to (-)15.2 per cent in May to (-)12.5 per cent till June 21. Electricity consumption has continuously improved from (-)19.8 per cent in the first week of June to (-)11.2 per cent in the second week to (-)6.2 per cent in the third week. This indicated that more businesses were returning to restart their operations as the lockdown was lifted.
Even consumption of petroleum products—a major indicator reflecting consumption and manufacturing activity in the country—increased by 47 per cent from 99,37,000 metric tonnes in April to 1,46,46,000 metric tonnes in May. Consequently, year-on-year contraction in consumption growth of petroleum products was much smaller at (-)23.2 per cent in May as against (-)45.7 per cent in April. The growth of consumption of petroleum products is expected to be still higher in June after one month of Unlock 1.0, the finance ministry said in its statement.
The agriculture sector has been a saviour of the country during the pandemic. The farmers ensured that the country's food security was not impacted. Despite several hiccups, procurement of wheat from farmers by government agencies has touched an all-time record figure of 382 lakh metric tonnes (LMT) on June 16, surpassing the earlier record of 381.48 LMT achieved during 2012-13. “This has been accomplished during the trying times of Covid-19 pandemic under the social distancing restrictions. Forty two lakh farmers have benefitted and a total amount of about Rs 73,500 crore has been paid to them towards Minimum Support Price (MSP) for wheat,” the finance ministry said.
The procurement of minor forest produces (MFP) in 16 states has also hit a record-breaking high with the procurement touching Rs 79.42 crore, thus providing relief to the tribals. As kharif sowing season is on, farmers have sown 13.13 million hectares of such crops till June 19, 39 per cent higher than corresponding period of the last year, with a big jump in area coverage under oil seeds, coarse cereals, pulses and cotton. “Fertiliser sales have surged by almost 98 per cent year-on-year in May 2020 (40.02 lakh tonnes), reflecting a robust agricultural sector,” it said.
In case of monetary indicators, the average assets under management (AUM) of mutual funds increased by 3.2 per cent to Rs.24.2 lakh crore in May from Rs. 23.5 lakh crore in April. Contraction in year-on-year growth in the indicator also fell from (-)6.9 per cent in April to (-)4.5 per cent in May.
As a sign of relief, India’s forex reserves at $507.6 billion as on June 12 continue to provide a crucial cushion to external shocks on the back of higher FDI, portfolio flows and low oil prices. FDI in India recorded inflow of $73.45 billion in FY 2019-20, an increase of 18.5 per cent over the previous fiscal.
The services sector activities have also picked up as railway freight traffic improved by 26 per cent in May (8.26 crore tonnes) over April (6.54 crore tonnes), though still lower than previous year levels. “The improvement is likely to continue in June in sync with the growth in movement of goods on National Highways,” officials said.
In an indication that more people were travelling by road, the average daily electronic toll collections increased from Rs 8.25 crore in April to Rs 36.84 crore in May, a rise of more than four times. In the first three weeks of June, it has improved further to Rs 49.8 crore.
The government said the total digital retail financial transactions via NPCI platforms increased sharply from Rs 6.71 lakh crore in April to Rs 9.65 lakh crore in May. The trend is expected to continue in June driven by a sustained pick-up in real activity.
The stringent lockdown was implemented to curb the spread of Covid-19. However, it adversely affected the economy. “With a gradual shift in strategy towards saving lives as well as livelihoods as PM Narendra Modi said 'jaan bhi jahan bhi,' 'Unlock India' phase was started from June 1 with phased resumption of services and businesses,” the finance ministry stated. These indicators may give some hope about the slow revival in the economy badly impacted by the pandemic and the lockdown.