Economic revival cools off after steep recovery in May-June; these reasons to blame

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Updated: Jul 15, 2020 1:39 PM

In the week ended July 12, the economic indicator was flat on-week at 82 per cent of pre-Covid level for the first time after improvement in May-June

coronavirus, jefferies, indian economy, lockdown, unlockWhile seasonality could have played a role, the impact of slow demand is expected to have hurt the economy. (Bloomberg image)

Even as India steps out of the nationwide lockdown and begins to reopen in a staggered manner, the economic revival has once again slowed down after a quick recovery in May and June. In the week ended July 12, the economic indicator was flat on-week at 82 per cent of pre-Covid level for the first time after improvement in May-June, said the Jefferies’ Equity Research report. While seasonality could have played a role, the impact of slow demand is expected to have hurt the economy, it added. Re-lockdown in various states and cities are also attributed to the slow revival of the economy.

Among the major economic indicators that weakened last week, e-toll collections fell 2 percentage points on-week and stood at a 4-week low level of 81 per cent of the pre-Covid level. On the other hand, retail electronic transactions shrank by 9 percentage points to 79 per cent of pre-COVID levels, while the electricity consumption fell 1 percentage points in the week.

Also Read: PM Modi says India-EU summit to strengthen economic, cultural ties; jobs, trade, other issues on cards

Though the rural economy saw an uptick through surging currency in circulation, and auto, power demand, urban activity stayed sluggish. The mobility and web activity data, mostly associated with the urban demand and economy continued to underperform. Work mobility index fell 3 percentage points on-week, staying at the two-third of the pre-Covid level. While the congestion was flat at 41 per cent of the pre-Covid rate, the Web traffic to auto and property sites contracted by 1-2 percentage points and travel and hotel apps showed a contraction of 2 percentage points.

Watch: News with Financial Express July 15, 2020

Meanwhile, with a better than normal monsoon, trends in the agriculture sector brought hopes a summer crop sowing is 44 per cent more on-year with about half of sowing already done. However, cases related to the coronavirus infections are rising steeply and have crossed the 9-lakh mark in the country. Even as the cases in large cities like Mumbai and Delhi seems to have peaked, states like Bihar, Jharkhand, and Uttar Pradesh are still struggling with the fatal pandemic. The instability thus caused are forcing states to go for another lockdown, thus hurting the economy.

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