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Ten charts that show the recovering parts of the $2.7 trillion Indian economy

Rounak JainJul 8, 2020, 10:02 IST

Ten charts that show the recovering parts of the $2.7 trillion Indian economy — Representational image.BCCL
The COVID-19 pandemic brought the Indian economy to a standstill, leading to an increase in unemployment rates and economic output crashing down.
However, with Unlock 1.0 underway, several parts of the $2.7 trillion Indian economy have started recovering.
Rural India, often referred to as Bharat, is taking the lead in staging a recovery, while urban India is trying to catch up, too.
The COVID-19 pandemic has ravaged the Indian economy, bringing it to a virtual standstill, impacting everyone from the rich to the poor. However, with Unlock 1.0 underway, the Indian economy seems to be on the path to recovery.

According to data collated by a Kotak Mutual Fund report for the month of July, 2020, there are several signs that show how the Indian economy is recovering in the post-COVID world.

One highlight from the report is that rural India, often referred to as ‘Bharat’, is leading urban India when it comes to economic recovery. This should come as no surprise, though, since the monsoon season is here.

The Indian Meteorological Department (IMD) has predicted normal monsoon this year. The Indian government has pinned its hopes on the rural sector driving India’s economy to normalcy, and initial reports suggest it could be betting on the right horse.

Also read: TCS earnings, COVID-19 cases, foreign investment flows – here’s what will move Sensex and Nifty 50 this week

1. Petrol and diesel consumption has picked up again

1. Petrol and diesel consumption has picked up again — Spark Capital / Business Insider India / Flourish
Petrol and diesel consumption declined by up to 60% in April when the lockdown was in force. However, since then, consumption has picked up pace again, with the fall in demand reduced to 18% in June from 60% in April.
The petrol and diesel prices have increased by ₹9.17 and ₹11.4 a litre respectively from June 7 to 29.

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2. Power consumption has touched 90% of last year's demand

2. Power consumption has touched 90% of last year's demand — Government of India / Business Insider India / Flourish
Despite constraints and frequent local lockdowns, urban India is trying to reach normalcy with Unlock 1.0 underway in several parts of the country. Power consumption, which is one of the key indicators of economic activity⁠— particularly because factories consume enormous amounts of electricity⁠ — has touched 90% of last year’s demand after dipping to 70% in April this year.

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3. Electronic toll collections are picking up pace, too

3. Electronic toll collections are picking up pace, too — Jefferies / Business Insider India / Flourish
With goods movement resuming in May, electronic toll collections have increased rapidly. This, along with e-way bill generation and fuel consumption suggests that the manufacturing industry is making a recovery steadily.

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4. GST collections have touched 90% of FY20 average

4. GST collections have touched 90% of FY20 average — Ministry of Finance, MOFSL / Business Insider India / Flourish
With movement of goods and the economy opening up, GST collections have once again come back to normal, touching 90% of FY20 average in June.

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5. E-way bill generations have increased, too

5. E-way bill generations have increased, too — GSTIN / Business Insider India / Flourish
Under the goods and services tax (GST), an e-way bill is required by transporters to carry while moving goods from one place to another. The e-way bills are another indicator of trade activity, and after crashing in April during the nationwide lockdown, they have picked up pace again. In June 2020, 39.9 million e-way bills were generated, as compared to 49.7 million in June 2019.

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6. Retail fertilizer spending has doubled in May 2020

6. Retail fertilizer spending has doubled in May 2020 — MOFSL / Business Insider India / Flourish
With prediction of a normal monsoon this year, farmers have spent twice as much on purchasing fertilizers this year compared to 2019. While April saw an increase of 50% in spends, May witnessed an increase of 100%, when compared to the same period last year.

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7. Tractor registrations have touched 90% of FY20 levels

7. Tractor registrations have touched 90% of FY20 levels — Spark Capital / Business Insider India / Flourish
After crashing in April and May, the number of tractors registered daily has touched 90% of the average levels of last year, which is another indicator that farming activity is back on track.

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8. Kharif sowing area has increased by more than 50% in June 2020

8. Kharif sowing area has increased by more than 50% in June 2020 — IMD, Ministry of Agriculture, Jefferies / Business Insider India / Flourish
Again, the prediction of a normal monsoon and 15% excess rainfall in June has pushed farmers to increase kharif sowing area by more than 50% in June compared to the same period last year.

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9. Manufacturing PMI has seen an increase of 50% over May

9. Manufacturing PMI has seen an increase of 50% over May — Source: Bloomberg, MOFSL / Business Insider India / Flourish
India’s manufacturing purchase manager’s index (PMI) saw an increase of 50% in June when compared to May. However, the recent lockdown extensions in some parts of the country and the rising COVID-19 cases threaten to slow down India’s manufacturing PMI again.
“For a start, the breakdown of the manufacturing PMI suggests that output is recovering faster than employment. While the new orders component jumped from 21.4 in May to 46.4 in June, the employment component only edged up from 42.7 in May to 44.2 in June,” said Darren Aw, Asia economist at the London-based Capital Economics.

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10. Unemployment rates are down but still too high

10. Unemployment rates are down but still too high — CMIE / Business Insider India / Flourish
With Unlock 1.0 allowing resumption of several economic activities, unemployment rates have fallen rapidly in June, crashing to as low as 7.26% after peaking at 29.22% in May.

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