Despite slowing down to 4.1% growth during March’22 quarter, optimism runs high with regard to economy’s projected performance in the current quarter. The latest RBI bulletin gives some idea of segmental performance. These are based on high-frequency data such as e-way bills generation, railways freight loading, tourist arrivals and so on. While most of the sectors have crossed the 2019 figures, a few still lag behind. Here is a look at the performance of some of the key indicators.

Freight –

Among the lead indicators of industrial activity is the freight traffic movement by Railways. As per the RBI bulletin, railway freight traffic grew by over 23% during April-May’22, the two months of the current quarter, against 15% in Jan-March’22 (referred as Q4, henceforth) and 19% in Oct-Dec’21 (Q3). This implies a sustained gain in momentum. Port traffic, mode of transport indicating global trade, stands at about 10% in April-May. This was less than 4% in Q4 and slightly more than 4% in Q3. Port traffic freight movement had actually seen a recovery till about June’21 but went back to contraction with increase in freight, shortage of vessels and rise in fuel prices.

A problem with port traffic figure is that the increase is more due to imports, some of which replaces domestic production, rather than due to exports, which would have added to the domestic growth momentum. This is reflected in India’s merchandise trade deficit which has risen to almost $45 billion in two months alone against about $56 bn in Q4. Any note celebrating growth in exports and calling imports growth as a sign of momentum of domestic demand must be taken with a pinch of salt.

Aviation, the worst affected across the transport sector, is still below the pre-pandemic level in three of the four parameters. However, the decline is getting narrowed. For the month of April’22 (over April’19), latest available, domestic passenger traffic is lower by 1.5%, much better than decline of 30% in Q4. International passenger traffic is sharply lower at 37%, still better than -54% in Q4. International cargo, which was doing better than domestic cargo till Dec’21, is down 5.2% in April against close to 10% in Q4. International cargo had recorded growth of 8.4% over its pre-pandemic level in Oct, possibly, driven by festive demand. The only silver lining is domestic cargo traffic which is higher than pre-pandemic level, although marginally by 2.7%, against decline of 11% in Q4. Tourism shares its fate with international aviation with tourist arrivals still recording severe decline of 72% in April-May, although better than over 80% in Q4.

Another high-frequency indicator is highway toll collections which reflects freight as well as passenger movement. Over the base of Feb’20, toll collection volume has recorded 140% increase in May, against about 60% in Q4. In terms of value, May figure has recorded growth of 110% against 50% in Q4.

Manufacturing Sub-sectors

An important indicator of economic activity and sentiments is PMI (Purchasing Managers’ Index), derived from monthly surveys of private sector companies. As per RBI bulletin, manufacturing PMI stood at 54.6 in May, maintaining this level over last 4-5 months. A figure above 50 indicates expectation of higher activity. While manufacturing PMI is 54.7 during the two months is better than 54.3 in Q4, it is lower than 56.3 in Q3. This indicates some loss of momentum, possibly due to geopolitical issues. Services PMI has recorded sharp improvement, from average 52.3 during Q4 to 58.3 in April-May.

The performance of construction sector, among the largest employer of blue collared workers and an important indicator of overall industrial activity, is reflected in Cement and Steel consumption. Steel consumption has grown at 12.4% during April-May, significantly better than 5.1% in Q4. Cement has also seen a similar performance with growth rate moving up from 7% in Q4 to 8.9% in April.

The other sector for which data is available is automobile where two out of four sub-segments are faring very bad. The better ones are passenger vehicle where sales grew by 6.2% in April-May against less than 3% in Q4. Tractors have shown sharp increase in growth, up 48% against barely 2% in Q4. However, two-wheelers have seen a reversal with decline of 28% in April-May against -18% in Q4. Three-wheelers is the worst, down 50%, almost the same in last several quarters. This is among the few sectors like aviation and tourism hit the hardest by Covid-19 due to lower mobility and changed preference for mobility.

A sector for which information has been added recently is hotel industry. The occupancy rate, which averaged about 68% in 2019 and had fallen to 10% in April’20 is only marginally lower than pre-pandemic at about 66% in April’22. In terms of revenue, hotels industry has crossed the pre-pandemic level.

Taxes etc –

The most definitive sign of economic activity is the growth in indirect tax collection. For the month of May, GST collection reached Rs 1.4 lakh crore against less than Rs 1 lakh crore in May’19. GST collection has maintained its level of Over Rs 1.2 lakh crore over last several months now. Other than GST collection, economic activity is also captured through e-way bills, which reflects actual movement of goods. Generation of e-way bills by industrial sector has grown sharply, by almost 40% in April-May against 28% in Q4. E-way bills is further segregated between intra-state and inter-state. While growth in inter-state movement is 22%, intra-state growth stands at significantly higher 46% implying more shipment within the state.

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