NEW DELHI / MUMBAI: Manish Mehra, owner of Washex Hospitality, an industry laundry service, recently flew from Delhi to Jodhpur, a city in northwestern India, to secure a contract to service a large government-run hospital, an essential step in getting his business up and running.
“For a new relationship it is essential to know each other before you can establish the trust and security to work online and that need is greater in the case of government departments,” said Mehra, who had to stay a week in a hotel in Jodhpur.
Increased demand for air travel and hotel stays by small business owners like Mehra, accompanied by an increase in rural income and spending after two good monsoons, is helping the pandemic-hit Indian economy to slowly recover. .
Government data released on Friday showed the economy contracted 7.5% in the July-September quarter, outperforming analysts’ expectation of a 8.8% contraction as lockdowns eased. and a certain pent-up demand was satisfied. In the April-June period, the economy contracted 23.9%.
Annual growth of 3.4% in agriculture and 0.6% in manufacturing during the September quarter has raised hopes for a speedy recovery and some service sectors such as commerce, hotels and transportation contracted to a much slower pace compared to the April-June period.
Farmers, benefiting from a bountiful harvest, are licking tractors, while demand for personal vehicles, due to a lack of public transportation and the need for safer travel options, has driven car and motorcycle sales.
There has also been a rebound in goods and services, tax collection and higher energy consumption.
A recovery is taking shape and has been led by the manufacturing sector that has gone from near annihilation in the July quarter to rebound mode, said Yuvika Singhal, an economist at QuantEco Research.
“Until there is a stronger recovery in the high-touch service sectors, which account for 60% of GDP, agriculture and manufacturing are expected to drive growth,” Singhal said, adding that India is still growing at a rate. lower GDP base and it will take more than a year to recover lost output.
SLOW START FOR HOTELS, AIRLINES
A number of Marriot hotels in industrial cities such as Sriperumbudur, Visakhapatnam and Nasik are operating at 50-60% occupancy and most of the guests work with domestic manufacturing companies, said Ashish Jakhanwala, CEO of the SAMHI hotel firm, which owns the properties.
Meanwhile, SAMHI’s hotel in the tech city of Bengaluru, which relies mainly on large corporations, occupies only 20-30% of rooms.
“Demand from large companies and international travel will take longer to recover. Hotels serving the public sector and infrastructure companies are improving, ”said Jakhanwala.
Since late May, when the government lifted the ban on flights, monthly domestic passenger traffic has more than doubled from 2 million in June to more than 5 million in October. But that’s still down from 12 million a year ago.
IndiGo, India’s largest airline, and its rival Vistara, are seeing a rebound in business travel, but to a much lesser extent than before.
“Much of it comes from small and medium-sized enterprises (SMEs) or small business owners who cannot afford to sit at home,” said Vinod Kannan, commercial director of Vistara, a joint venture between Singapore Airlines and Tata Group.
SMEs have contributed to a 35% to 40% recovery in hotel bookings compared to pre-COVID times and between 27% and 32% in flights, according to online travel agency MakeMyTrip.
ROBUST RURAL RESTORATION
In the interior, the impact of Covid-19 has not been as severe as in large cities and farmers have benefited from good rains for two years in a row, leading to a bumper harvest and suitable conditions for the crops planted. in winter. This is driving sales for tractor manufacturers such as Mahindra and Mahindra.
The lack of adequate and safe public transport in small towns and villages has also increased the demand for cars and motorcycles.
Maruti Suzuki, India’s largest automaker, had 10% growth in rural sales between July and September versus an overall 4% increase, led by entry-level small models, said Shashank Srivastava, CEO marketing and sales.
“While Bharat (rural India) is leading India in terms of recovery, it cannot lead India,” he said, adding that steady long-term demand will depend on improving economic factors, rising incomes and a rebound in urban markets.
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