The prospects of India's economy for the rest of the year depend on how the pandemic evolves and the government responds
The murderous toll of India’s second wave of covid-19 infections is impossible to miss but hard to measure. The same is true of its toll on the economy.data for April to June will not be released until the end of August. Figures for industrial production in April will not appear until mid-June and will anyway miss the service sector, which is likely to be hardest hit. India’s government publishes a “periodic” survey of the labour force.
Just as satellite images can see the increased intensity of India’s pyres during the day, they can capture the reduced luminosity of its cities at night. In March last year, when Narendra Modi, India’s prime minister, introduced a strict nationwide lockdown, India’s night-time lights darkened by 5.6% compared with a year earlier, according to Robert Beyer, Sebastian Franco-Bedoya and Virgilio Galdo of the World Bank. By May 2020, India was 10% dimmer. The country as a whole has brightened since.
Mr Beyer and his colleagues have also taken advantage of India’s daily statistics on electricity consumption, which they have “scraped” from the website of the grid operator. During April 2020, consumption fell by almost 27% below the amount that past patterns would predict, given the temperature and the underlying upward trend in India’s power usage. Consumption finally surpassed its expected level in March 2021. That recovery, however, has retreated in recent weeks .
The economy’s prospects for the rest of the year depend on how the pandemic evolves and the government responds. Mr Modi has left it up to the states to decide how and when to reimpose restrictions on gathering. The country therefore faces a patchwork of impediments to moving and mingling. One way to measure their stringency is to tally up the different types of restrictions, such as school closures or event cancellations. Another is to use smartphone data tracking the drop in users’ mobility.
Analysts at Goldman reckon lockdowns today disrupt the economy less than did similar lockdowns a year ago, as businesses and consumers have adapted. If India’s restrictions remain only around their current level for the three months from April to June, economic activity will be 2.9% smaller than it was in the previous three months, they predict. If the pandemic then relents,could still be much bigger this year than it was last.