“In October 2020, India recorded a significant decrease in the number of daily COVID-19 cases, resulting to a drop in its global ranking—for the number of active COVID-19 cases—from 2nd to 4th as of October 31, 2020, following the US, France, and Spain. As of October 03, 2020, the number of active cases has been steadily declining at a rate of 1.4%. The rate of recovery increased to >90%, as of October 31, 2020, vis-à-vis 83.3% as of September 30, 2020.
However, the focus on taking adequate care to wash hands and social distancing should not be overlooked in the festive season, as a committee of experts—set up by the Department of Science and Technology—advised that if proper precautions are not taken, a second wave of infections could emerge before February 2021. Increased testing is a vital technique to limit the spread of infections and is the first step towards timely diagnosis, prompt isolation and effective care. India screened ~11.07 crore cumulative COVID-19 samples as of October 31, 2020, keeping the focus on the ‘Test, Track and Treat’ strategy.
There has been a significant increase in business activities, indicating India’s systematic management of the pandemic crisis compared to advanced nations. In October 2020, the trend of high frequency indicators specifically pointed to a broad-based rebound of economic activities, mainly in Kharif production, energy consumption, rail freight, car sales, registration of vehicles, collection of highway tolls, e-way bills, digital transactions and GST collections.
The outlook for economic stabilisation is evident in sector indicators with the consumption of petroleum products rising in September 2020 and exports bouncing sharply for the first-time in the last seven months with positive y-o-y growth. Traffic volume in rail freight in September 2020, surpassed the rate of the previous year, driven by strong growth in traffic of iron ore, finished fertilisers and containerised goods. Global investors are optimistic about the economic prospects of India as gross inflows of FDI surpassed US$ 35 billion between April 2020 and August 2020, the highest-ever recorded for the first five months of a financial year.
Among all the key growth generators, the construction sector at present has the capacity to majorly accelerate the Indian economy. In the last five years, the construction sector has contributed an average of 8% to the total gross value added (GVA). In addition, 15.5% of the GVA contributed was associated to services in areas of real estate, housing ownership and professional services. Thus, more than one fifth of the overall GVA was contributed by the construction sector. The role of the construction sector in the Indian economy can be further determined by the fact that it is the largest employment generator, next to agriculture, employing ~12% of the working population of the country, i.e., >51 million people.
The government has mainly concentrated on infrastructure development across various sectors and introduced schemes such as Deen Dayal Upadhyay Gram Jyothi Yojana (DDUGJY) Nal Se Jal, Sagarmala Bharatmala, Atal Mission for Rejuvenation and Urban Transformation (AMRUT), Pradhan Mantri Gram Sadak Yojana (PMGSY) National Logistics Policy, National Infrastructure Plan Integrated Power Development Schemes (IPDS) and Smart City Mission Railway Station Redevelopment.
In India, there are potential growth opportunities in the shared rental market due to numerous factors such as 5.7 million beds and a co-living penetration of 8.3%, compared with 3.6 million beds in 2018 and a co-living penetration of 2.6% in 2018. The shared rental market is projected to become a Rs. 1 trillion (US$ 13.43 billion) opportunity by 2023. Housing market has received major government support via various policy reforms. Between 2015 and 2020, there are various policies that have taken place in the market such as National Urban Rental Housing Policy (NUHRP), the Model Tenancy Act (MTA), the new Affordable Rental Housing Complexes (ARHCs) policy, etc.
At 4.8% higher than 2019, the monsoon in 2020 called for good sowing of Kharif crops. All regions received higher accumulated precipitation than the Long Period Average (LPA) except for North-West India, which received 16% below LPA rainfall. Live storage in key reservoirs as of October 29, 2020, was 86% of the full reservoir level (FRL), slightly lower than the 2019 level by 4%, but 17% higher than the decadal average.
The first advance estimate (AE) for growth of key Kharif crops for 2020-21 estimated the production of food grains at 1,445.2 lakh tonnes, 0.8% higher than 2019. The total output of kharif pulses and oil seeds is expected to be significantly higher than in the previous year with a growth of 20.6% and 15.1%, respectively.
With year-on-year (YoY) growth in the index of industrial production (IIP) showcasing small contraction in August 2020 at 8.0%, compared with 10.8% in July 2020, industrial output indicates signs of recovery. However, compared with July 2020, IIP contracted by 1.3% on a sequential basis.
Railway freight traffic has significantly improved since August 2020 due to economic recovery and rising demand. It increased by 15.5% (YoY) in September 2020 and 15.4% in October 2020, supported by demand for food grains, domestic coal for steel plants and thermal power houses, pig iron, finished steel, iron-ore exports, clinker cement and domestic containers. In the first twenty days of October 2020, gross revenue from railway passenger bookings stood at ~Rs. 927.55 crore (US$ 124.60 million), meeting 95% of September levels, driven by easing the interstate movement restrictions.
In October 2020, domestic aviation improved and is expected to recover further with the beginning of the festive season, as domestic airlines will soon be permitted to operate up to 75% of pre-COVID capacity, up from the 65% in October 2020. Also, the number of domestic aviation passengers surged from 2.8 lakh in May 2020 to 28.32 lakh in August 2020 and was 39.43 lakh in September 2020.
India’s Purchasing Managers’ Manufacturing Index (PMI) increased to 58.9 in October 2020—the highest figure in over a decade. This boost was driven by the overall economic growth and increase in business activities in the sectors such as consumer goods and investment products. The revenue upturn was the highest since mid-2008. In October 2020, the PMI Services index also increased to 54.1, breaking the seven-month contraction sequence.
Power consumption reported a 12.1% YoY growth in October 2020, fuelled by improvements in commercial and industrial activities, compared with 4.6% growth in September 2020.
A leading indicator of revenue collections, supply chain corrections and logistics growth, the persistent improvements in e-way bills make way for a strong economic recovery. The total value of e-way bills recorded YoY growth of 19% in October 2020, marking a strong economic recovery. Since mid-August, e-way bills have improved significantly to reach Rs. 16.82 trillion (US$ 225.95 billion) in October 2020, surpassing the corresponding levels of Rs. 14.12 trillion (US$ 189.68 billion) in 2019.
Some other infrastructure indicators
UPI payment transactions reached an all-time high in October 2020 at Rs. 3.86 trillion (US$ 51.85 billion) in value and 207 crore in volume terms. Trends in cash withdrawal from ATMs/micro ATMs and banking correspondents (BCs) also indicated improving demand sentiments.
In October 2020, the total daily electronic toll collection and number of transactions stood at Rs. 68.9 crore (US$ 9.26 million) and 39.5 lakh, respectively, compared with pre-COVID daily averages of Rs. 55.4 crore (US$ 7.44 million) and 32.6 lakh, resp., with improvements seen in most states.
In October 2020, FPI inflows remained strong, driven by rising economic normalisation trends and surplus liquidity in the global markets. In October 2020, the FPI reported a net inflow of US$ 3.2 billion, compared with an outflow of US$ 0.16 billion in September.
In October 2020, supported by revived FPI inflows, the Indian rupee strengthened over September. RBI’s dollar purchases in the foreign exchange market, kept the rupee range bound in October at 73.1-73.9 Rs./US$. As of October 23, 2020, India’s foreign exchange reserves stood at US$ 560.53 billion.
Total FDI inflows stood at US$ 35.73 billion between April 2020 and August 2020, the highest ever for the first five months of a financial year and 13% higher compared with the first five months of 2019-20 (US$ 31.60 billion).”