Shaping Revival: Economic Indicators linked to regain Pre- COVID-19 world

The stock market rally over the last seven trading sessions — where the Sensex jumped to close at a seven-month high, coincides with the fact that a number of consumption-related economic determinants have surpassed the pre-Covid levels.

Data shows that in September, demand for fuel and electricity, consumption of steel, toll collection, sale of tractors, passenger vehicles and two-wheelers — major indicators of economic activity surpassed February levels. While the stock markets have cheered the better-than-expected recovery of economic activity across sectors — barring few facing downfall.

Spending on electricity, which is strongly connected to overall economic activity has also seen a speedy rise. Fuel consumption, a prime indicator of people movement across the country, witnessed a recovery last month, accompanied by toll count and collections. Petrol and Diesel demand too somewhat recovered, but Diesel consumption had declined year-on-year in August. Strong vehicle sales numbers show uptick in factory output, TCS announcing a strong performance, lifted the stock prices of leading IT companies last week.

The E-way bills, power demand, Maruti Suzuki, Hyundai Motor, two wheelers too jumped in September over last year.

The jump in vehicle sales indicates pent-up demand as well as rise in private mode of transportation due to Covid-19. Tractor sales have shown a steady pick over the months since April as the rural economy jumps up due to healthy kharif output.

Among the areas facing challenges, state-owned banks, energy company, hotels, tourism and hospitality are on the top and continue to await revival. The strict local containment measures and the pandemics impact on global travel resulting in decline in tourist arrivals. Banks being the other trouble spots, mirroring weak credit demand and increased risk aversion in the banking system.

While data from the Reserve Bank of India, Finance Ministry stipulates an uneven pace of recovery across sectors, several key sectors such as IT, pharma, automobiles and retail have shown robust recovery, leading to upward expectations revision in GDP for FY21.

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