Economic activity picks up as curbs ease

From the stagnant levels in April, economic activity has started picking up, albeit slowly, due to relaxation of restrictions under lockdown 4.0. While it is still significantly low compared to last year levels, activity in several sectors is much better last week than the previous weeks in May and April.

The green shoots of a rebound have been visible in electricity consumption, e-way bills, consumer durable sales, railway freight, labour participation and vehicle registration.

The week-on-week increase in the generation of e-way bills shows the movement of goods is slowly coming back to normal levels. The average number of daily eway bills generated during May 18-25 has gone up to 9,40,000 from 8,20,000 and 6,00,000 respectively in the preceding two weeks. The average daily e-way bills generated on the Goods and Services Tax Network in April was less than 3,00,000.

Similarly, the daily average railway freight traffic has moved up from 2.2 million tonnes in April to 2.4 million tonnes in May. It stood at 3.7 million tonnes in February, as per the data provided by Kotak Institutional Equities.

The unemployment rate remained stable at 24 per cent during the week ended May 17 against 27 per cent in the week ended May 3, according to CMIE. Labour participation rate bounced back from its lowest level of 35.4 per cent in the week ended April 26. Moving up gradually week after week, the rate has reached 38.8 per cent in the week to May 17.

The electricity consumption gap, compared to 2019, narrowed in the week ending May 25. The fall in electricity consumption was 20 per cent in the week to May 11, but it reduced to 10 per cent by May 25.

Consumer durables' sales too have bounced back from near zero levels in April. In May, sales have risen to 30 per cent of the sales a year ago. "By the end of this month, sales have moved up to 30 per cent of May 2019. Almost 65 per cent of the retail shops have opened. Despite losing a large part of the summer sales, refrigerators, air conditioners and air coolers are being picked up from these outlets. We hope that by June, sales will pick up to 60 per cent of that in the year ago month," said Kamal Nandi, president, Consumer Electronics and Appliances Manufacturers Association (Ceama).

Vehicle registrations have also shown an uptick in the last two weeks. Agri-vehicle registrations were the least impacted and have recovered the most, finds Kotak. Two-wheeler and passenger car registrations have gone up by the week ended May 25 from the lowest levels in the first week of May.

The road traffic was also up in Bengaluru and New Delhi. In Bengaluru, traffic was close to 40 per cent of 2019 levels.