Recovery trends showed signs of slowing in all states in September
Electricity demand grew from 2019 figures for the third consecutive month, but the pace was moderate. Vehicle registrations have barely shown an upward trend and have yet to reach pre-pandemic levels. This interrupts the flow of the quick pickup track from July and August, with all hopes now tied to demand for the upcoming festival.
Maharashtra and Karnataka were the best performers among the top states on both indicators, while West Bengal, which had dominated the rankings for several months, did the worst. Uttar Pradesh, the fastest to rebound from the second wave of covid-19, fared rather badly, despite high levels of mobility and the lowest workload.
Delhi continued to perform poorly and lagged in electricity use, vehicle sales and mobility. Mid-sized states — Haryana, Punjab, Bihar, and Odisha — reported much worse numbers than the larger states.
The Mint State Recovery Tracking examines three high-frequency economic indicators – electricity consumption, vehicle sales, and mobility levels – to track the performance of the largest state economies (those that represent at least 4% of gross domestic product or GDP of India). Medium-sized (2-4% of India’s GDP) and small (1-2% of India’s GDP) economies are aggregated for this analysis.
Recovery shock absorbers
Defying speculation about a third wave of covid-19 hitting India around this time, new infections fell further in September from an already low figure. Kerala continued to be a stubborn outlier among the top states, and at the end of the month had 19 times more population-adjusted infections than the second-worst state.
The new vaccination campaign inspired business and consumer confidence for much of the beginning of September. However, the pace has slowed since the peak on September 17: fewer doses were given last week than a month ago.
A total of 114.5 billion units of electricity were consumed in September, an annualized increase of 2.7% from the corresponding month two years ago. However, this figure was 12% lower sequentially. Madhya Pradesh (10.9% growth) recorded the greatest improvement among the major states, followed by Andhra Pradesh (7.1%) and Maharashtra (5.6%). Delhi is doing the worst, with a drop of 6.8%. Rajasthan and West Bengal were the only other major states to experience a contraction.
The same month of 2019 was taken as the basis for assessing electricity consumption and vehicle registrations to avoid the artificially depressed figures of 2020.
A total of 1.3 million vehicles were sold in September, down 6% sequentially, according to data from the Center’s Vahan dashboard. It was also an annualized decrease of 7% from September 2019. Gujarat and Karnataka were the only two to register growth. West Bengal and Delhi, with a decline of 15%, had the weakest sales performance among the major states. Middle states are doing even worse.
Advances in mobility
Mobility data recorded by Google via smartphone users has been a key indicator to assess the level of normality throughout the pandemic. Nationally, attendance at public places exceeded pre-pandemic levels for the first time, albeit with significant variation from state to state. Among the major states, Kerala, with 114% of pre-pandemic attendances, had the highest levels of mobility, followed closely by Uttar Pradesh (111%). Delhi, despite consistently recording less than 50 cases per day, recorded the lowest mobility levels (88%) among the major states.
A large majority of districts across India are now reporting above-normal levels of mobility, according to Google data. Although the number of cases has declined in most parts of the northeastern states except Mizoram, mobility in the region is still well below pre-pandemic levels.
In September, the six largest state economies – Maharashtra, Tamil Nadu, Uttar Pradesh, Gujarat, Karnataka and West Bengal – were slightly ahead of overall national performance on the tracker. This bodes well for national recovery as these six states account for 50% of India’s economic output. Last year, those six states were several months behind national figures, which had weighed on the recovery.
Ten states, including Delhi, Gujarat, Madhya Pradesh, Rajasthan, Uttar Pradesh and West Bengal, had reported outbreaks of covid-19 during last year’s festival season, even when the first national wave was in decline. The same risk is also present this time around, and that could be an obstacle to a sustainable recovery. A determined push on the vaccination front will be essential even as companies impatiently await the revival of festive demand.
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