THE HORROR OF COVID STARTS UNFOLDING

about 22 days ago
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As we had pointed out in the previous article, getting economic data is a Herculean task but whatever data we got today, based on the limited sources, it has not been good.

March IIP came in at a shocking contraction of -16.7%v/s 4.5% in Feb while most analysts had pegged this contraction at almost half, around -8.5%. And this contraction for March is after only 10-12 days of lockdown. So what is the kind of contraction we are looking at for April when the entire month was shut down?

The department stated that IIP data is received from source agencies, who in turn receive the data from the producing factories/establishments. In view of the global COVID-19 pandemic and consequent nationwide lockdown measures implemented since March, 2020, the data flow from the producing units was impacted. As some of these units are yet to resume operations, the response rate has been lower than usual. Consequently, the Quick Estimates are likely to undergo revision and will be incorporated in subsequent releases as per the revision policy of IIP. So the data we look at now, is merely a small indicator of what we can expect in the next few months.

Internals of IIP for March (MoM):

  • Manufacturing - (-)20.6 v/s 3.2%
  • Mining – 0 v/s 10%
  • Electricity – (-)6.8% v/s 8.1%
  • Capital Goods – (-)35.6 v/s (-)9.7%
  • Primary Goods – (-)3.1% v/s 7.4%
  • Consumer durables – (-)33.1% v/s (-)6.4%

And mind you, this overall contraction we are seeing all facets of the industrial growth is after only 10-11 days of lockdown. April numbers will be one of a kind, which we hope to never ever see in our life time! May could also be a horror story…indeed the nightmare of the pandemic is beginning to unfold.

And CPI for April came on the expected lines – 5.84% v/s 2.86% (YoY) v/s 5.91 (MoM) and the MOSPI made it very clear that the data collection methodology was a challenge and data was for only a select group. Food prices were unchanged at 8.76%.

The statistical data department explained that while price data is usually collected from selected 1114 urban markets and selected 1181 villages through personal visits by field staff of Field Operations Division of NSO, MoSPI on a weekly roster, this time around, due to the pandemic, price collection of Consumer Price Index (CPI) through personal visits of price collectors was suspended with effect from 19th March, 2020.

In the month of April, 2020, price data was largely collected by telephonic enquiry from the designated outlets. This was supplemented by information collected during the personal purchase of field staff for the items being transacted from neighborhood outlets keeping in view the travel advisories. The whole exercise was carried out by well experienced and professional staff of FOD, NSO stationed at about 200 locations across the country. NSO accordingly collected prices from 674 urban markets and 524 villages, for commodities which were available and being transacted during the lockdown period.

In view of the limited transactions of products in the market in the month of April, 2020, it has released the Price Movement of Sub-groups/Groups of CPI, following the principles of adequacy. The Price Movement of these Sub-groups/Groups of CPI were worked out with following criteria:

i) 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.

ii) 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.

Accordingly, the Price Movement for the sub-groups ‘Meat and fish’ and ‘Prepared meals, snacks, sweets etc.’ under ‘Food & Beverages’ Group as well as the Groups ‘Pan, tobacco and intoxicants’ Group, ‘Clothing and Footwear Group’ were not compiled. Under ‘Miscellaneous’ Group, only the index for ‘Health’ subgroup has been compiled for the month of April, 2020. The General CPI and indices at State/UT level was not released for the month of April, 2020.

Well, we don’t know what to expect from the GDP numbers for Q4 scheduled for 29th May.

The nation will now tune in for the PM’s address at 8PM tonight. This time of 8PM has somehow created a scare as it has always been a harbinger of very bad news. Today might be about lifting partial lockdown in some states but for us living in metros, especially Mumbai, things will likely remain status quo. But if the PM extends the lockdown, Dalal Street will don the colour red tomorrow.

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