The month of April was a month of almost complete shutdown, lockdown almost 100%. And that’s why IIP for April was expected to have shrunk by 40 to 50% as just 10 days in March had pushed the IIP to the “worst contraction ever.” As 5.30 Pm approached, our wait for the data got longer only to realise 10 minutes later that this month there was no 'real' economic data coming.
The Govt, instead of announcing this ahead of time, waited till the stipulated time and did not release CPI for May and IIP for April. All it gave was a food CPI number which was up 0.1% at 9.28% and vegetable was down 10.7%.
Well data collection itself was so weak so maybe the Govt did not have any numbers to really work on. CPI data was in the month of April was largely collected by telephonic enquiry from the designated outlets. NSO collected prices from 674 urban markets and 524 villages, for commodities which were available and being transacted during the lockdown period.
The Price Movement of these Sub-groups/Groups of CPI were worked out with following criteria:
- The price of only those items were included which have been reported from at least 25% of markets, separately for Rural & Urban sector and constituted more than 70% weight of the respective Sub-groups/Groups.
- The all India indices have been compiled using Direct Approach by considering a common market at the national level in both Rural & Urban sectors separately.
As such supplies were constrained so there was really no reliable price data. And there was no real data on the April IIP at all but we can most certainly assume that it was down 40-50%.
The only economic data as such we now have is the PMI, wherein Manufacturing in April was down a record low of 27.4 from 51.8 (MoM). The IHS Markit survey showed that new orders fell for the first time in two-and-a-half years and at the sharpest rate in the survey’s history, far outpacing that seen during the global financial crisis.
One month has wrecked so much havoc and we still have May data to contend with. Though the lockdown has been lifted, economic activity is yet to pick pace as supply chains remain disrupted and labour woes are getting worse.
There is worry that RBI policy decisions will be impacted due to lack of data but for RBI, in this ever evolving situation, any data as such would be irrelevant unless it is current. And for now, it is unlikely RBI will be guided by these data as no data at the moment is reliable.
Thus the rumours of today on social media, saying that the Maharashtra Govt was once again locking down the state from 15th June till 15th Sept was so evil. Its good that the CM immediately clarified and squashed this rumour saying that it had no plans to impose the again; or else for India to get out this morass would be next to impossible.
The virus is spiking and we are in unlocking but we all need to get back to life, learning to live with the virus or else so many more people will be pushed into poverty and many on the brink of poverty. The human is the most advanced creation and for a reason – we have the spirit to overcome and that’s what we all need to do, slowly but surely.