The Indian economy contracted a whopping 23.9% in the June quarter, an unpleasant figure that the market largely expected. But more than the impression of the headline, what worried the markets were the gaps behind its calculation. In fact, the Central Statistical Organization (CSO) faced a major challenge in collecting the gross domestic product (GDP) data, as the lockdown of the first two months of the quarter made it impossible to do so.
“… the usual data sources were replaced by alternatives such as GST, interactions with professional bodies, etc. and which were clearly limited,” the statement said. In this context, economists have created their own proprietary indices, which may be more reliable in measuring the economic impact of the pandemic.
One of the most popular indicators since the hit of the pandemic has been Google’s mobility index, which measures visits to different locations, such as retail stores, workplaces, parks, and transportation hubs.
Abheek Barua, chief economist at HDFC Bank, said these indicators serve as a good indicator of what to expect in the coming months. “We and others have also taken the mobility index in our own indices of economic activity. These capture the improvement or lack of it in different segments quite accurately, “he said.
Most indicators have shown that the initial improvement in June has diminished in July. In short, the economic recovery is fragile. Electricity use and fuel consumption showed how the recovery in industrial production could be prolonged. One of the unlikely indicators that could show signs of recovery is inflation in the wholesale price index (WPI). In an interview with a television channel, the Governor of the Reserve Bank of India, Shaktikanta Das, said that the central bank looks at multiple indicators, one of which is the inflation of the MPI. Recent impressions of the headline number have shown that producers are far from regaining their pricing power. This indicates that the demand has not yet been reactivated.
Additionally, GST’s gross revenue collected in July was Rs 87,422 crore, 14% less than a year ago. Another widely followed indicator of business activity is the trend in the generation of electronic invoices, which also shows that the rate of recovery observed in June and July has not been maintained in the latest data. E-Way invoice generation for April, May, June and July remained at levels of 16%, 46%, 79% and 88%, respectively, of the pre-covid levels, but returned to 80%, as shown the latest data from mid-August. , based on data collected by ICICI Direct.
“The recovery remains uneven with a faster rise in supply versus demand, rural consumption versus urban and industrial versus services,” Nomura economists said in a note on Aug. 25.
Many companies now indicate that pent-up demand is slowly disappearing, so it remains to be seen how the data for the coming months turns out.
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