Indian economy is like the celestial bird Phoenix. Just like the fabled bird Phoenix which rises back bigger and better every time from the ashes, our economy too has bounced back bigger and better after every crisis in the past.
There is no reason why India\’s recovery post-Covid-19 should be any different.
Prime Minister Narendra Modi in one of his speeches asserted that ‘green shoots’ had started to emerge in the economy. He also called for the need to focus on both lives and livelihood while ensuring that economic activity gathered pace, with the lifting of various lockdown-related curbs over the past two weeks.
Well, in case you missed the speech, here’s what the Prime Minister said: “Green shoots have begun to emerge in the economy, power consumption has begun to go up, fertiliser sale in May has been double that of May last year; Kharif crop, two-wheeler production, digital payments too showing positive signs.”
Yes, things are indeed getting back to normal. Let me share a personal experience here:
Yesterday afternoon, I went out for a walk with all the safety measures in place.
In my 60-minute journey, I covered a lot of places on foot and on the way, I noticed that in most places, shops had opened up including beauty salons, restaurants, stationery shops and toy stores. I also came across one or two construction sites where work was going on in full swing. On the way back, I also passed through a noisy industrial area which indicated that work has indeed resumed.
Of course, the numbers of both workers and customers at all these places were a tad less. Nevertheless, things are back on track.
Increase in on-ground activity seen in June 2020
Data from our channel checks and on-ground readings suggest that the on-ground activity seems to be normalising in June faster than expected.
|
Category/company |
Vs pre-Covid levels * |
|
2-Wheeler- Rural/Urban |
75%/65% |
|
4-Wheeler/ Tractors |
50%/100% |
|
FMCG- Rural/Urban |
85%/70% |
|
Innerwear |
80%-90% |
|
Organised Jewellery |
50%-60% |
|
Banking credit |
95%-100% |
|
Insurance (Life & General) and Mutual Fund Inv. |
70%-75% |
|
Paints |
70%-80% |
|
Consumer Durables |
60%-70% |
|
Cement/ Steel |
85%/75% |
Fall in the unemployment rate
According to data released by the Centre for Monitoring Indian Economy (CMIE), the unemployment rate after touching 23.5 per cent in April 2020, dropped to 11.6% in the second week of June. The data also suggest that in rural India, labour participation has recovered to 95.4% of its pre-lockdown-week (March 22) level while in urban India, labour participation has improved to 93.2%.
Increase in retail spending
According to data from ShopperTrak\’s index, based on inputs from collection devices in the retail marketplace and shopper visits, the number of consumers visiting retail stores surged in June from the previous month as retailers started resuming their stores.
Increase in consumption of petroleum products
After a 46 and 23 per cent fall in consumption of petroleum products during April and May 2020 respectively, the consumption crossed 16 million tonnes in June 2020 with an increase in demand from both rural and urban regions.
Increase in electricity consumption
As per data revealed by the finance ministry, electricity consumption which contracted 24% in April, 15.2% in May and 12.5% in the first three weeks of June. By the third week of June, the contraction was down to 6.2%, driven by the increased power consumption in industrial western states.
Bottom line
These real activity indicators like inter and intra-state movement of goods, electricity and fuel consumption and retail financial transactions indicate just one thing. Things are back on track. With timely monsoon, the agricultural sector considered as the backbone of the Indian economy will aid in faster recovery.
Yes, it will take some more time for a full recovery. Just like recovering from Covid-19 illness, requires some time, the economy too may take a few months to recover sufficiently to pre-Covid-19 levels.
It is only a matter of time before we see a full-blown recovery in the economy. Stock markets have already noticed this and that is why markets have recovered to a great extent from significant lows hit in the month of March. To ensure that you don\’t miss out on the upcoming bull run, you can invest in these fundamentally strong stocks which have the potential to outperform over the next 4-5 years.
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Read more: How Long-term investing helps create life-changing wealth – TOI.