The economy has shown clear signs of a sustained recovery since the lockdown was lifted. As can be seen from the resurgence of economic activity as indicated by high frequency indicators, economic normalization is evident, although there are still some clouds on the horizon.
GST collections as well as electricity consumption have been steadily rising since July although both experienced a dip in August. Both have stayed strong since then.
The Manufacturing Purchasing Manager’s Index has not dipped below 50 since August, registering positive growth rising to 58.9 in October. PMI services index also rose to 54.1 in October ending a 7 month long contraction.
The growth rate of core industries has also rapidly recovered, dipping by 0.5% in August but regaining its growth dramatically in September.
The Google Mobility index has also shown a steady and sustained recovery since July.
The rupee has stayed strong throughout the crisis and not shown much fluctuation.
The unemployment rate has fallen to 6.98 in October from 23.52 in April at the peak of the crisis. However, the labour force participation rate has not improved to the same extent staying relatively low at 40.66% in comparison to April at 35.6% showing that the number of people employed has in fact not increased and labour has not returned to the market.
In conclusion while the economy shows positive growth in most sectors, the labour situation has worryingly failed to show the same improvement.
That being said, if the momentum of economic activity continues, India is poised to reach pre-covid levels by the end of the year barring a second wave of COVID 19 as seen in other parts of the world.
(Harshada Gupte is a policy research consultant at MCCIA.)