In Charts: Record-Breaking Lows The Indian Economy Saw In April
April has been a month of record lows across the world. Plunging manufacturing. Soaring unemployment. Stalled trade.
India was no different. The nationwide lockdown stretched out from March 24 until May 3, with partial relief provided thereafter. This meant that large parts of the Indian economy were at a near standstill in April.
This reflected in the data, with indicators of manufacturing, services, along with electricity and fuel consumption all seeing historic drops.
The India Manufacturing Purchasing Managers’ Index, compiled by IHS Markit, fell to 27.4 in April from 51.8 in March. This was the steepest drop on record.
In an environment of severely reduced demand, new orders fell for the first time in two-and-a-half years and at the sharpest rate in the survey’s history, far outpacing that seen during the global financial crisis, the agency said.
While most economies saw similar drops, the level to which manufacturing activity fell in India was the lowest globally. Indonesia, too, saw an almost similar drop.
One sector which reflected the pain being felt across many segments of manufacturing was automobiles. Some of India’s top auto firms, such as Maruti Suzuki and Bajaj Auto, reported zero domestic sales.
At Maruti, domestic sales dropped to 0, while the company managed to export 632 vehicles in April. Bajaj Auto too had zero domestic sales but recorded exports. Mahindra and Mahindra sold 733 units in the export market but nothing dometically.
Escorts also sold 705 units in the last few days of April, after the government gave an exemption on sale of agricultural machinery from April 20.
The services sector gauge compiled by IHS Markit reflected sentiment even weaker than what seen across manufacturing.
The India Services Business Activity Index fell to 5.4 in April, an “extreme decline” from 49.3 in March, IHS Markit said. The reading is “indicative of the most severe contraction in services output since records began in December 2005,” the release said. Approximately 97 percent of survey respondents observed a reduction in output, highlighting the widespread impact of the Covid-19 pandemic, IHS Markit said.
Surprisingly, the service sector gauge fell more than manufacturing even though three key sectors -- financial services, telecommunication and, to some extent, healthcare -- were functioning. IHS Markit explained this saying that respondents are asked about the new business prospects as part of the survey. As such it reflects sentiment around future business rather than current activity.
Petroleum Product Consumption
The drop in fuel consumption, which began in March, worsened in April.
With fewer vehicles plying on roads, consumption of petrol fell by 60.4 percent in April 2020 over a year ago, according to data from the Petroleum Planning and Analysis Cell.
Diesel, consumed in factories and for plying commercial vehicles, fell by 55.6 percent year-on-year in April 2020.
With factories closed and power demand coming mostly from households, demand for electricity has plunged.
The demand met during evening peak hours, i.e. 7 pm, contracted by 32.5 percent for April 1-30 2020 over last year, according to daily reports published by the Power System Operation Corporation Limited.
On some days, demand during evening peak hours was half the demand that was seen on the same day an year ago. In the last weak of the month, average demand remained lower by 36.5 percent, despite easing of restrictions in some parts of the country.
Movement Of People
The lockdown severely restricted the movement of people. Governments across the world see such restrictions as the only way to curb the spread of the virus.
The result is that people are no longer moving out for recreation or work. The Google Mobility Report measures changes in mobility between March 19 and April 30.
The report shows that mobility in areas of retail and recreation saw the steepest fall of 84 percent over this period. Mobility in residential areas rose by 29 percent.
The rate of unemployment spiked to 22.89 percent for the month of April 2020, compared to 8.74 percent in the preceding month, according to data by the Centre for Monitoring the Indian Economy.
According to estimates by the consumer pyramids household survey, employment fell by 11.4 crore in April 2020, 29 percent lower than in March, when it had already dropped to 39.6 crore.
On a weekly basis, the unemployment rate shot up to 27.1 percent in the week ended May 3, and could climb further as the lockdown gets prolonged, according to a research note by Mahesh Vyas, founder and managing director at CMIE.