Tracking economic and industry trends amidst COVID-19...Feb 24, 2021 · Jan-20 Feb-20 Mar-20 Apr-20 May-20 Jun-20 Jul-20 Aug-20 Sep-20 Oct-20 Nov-20 Dec-20 Jan-21 Million tonnes

Tracking economic and industry trends amidst COVID-19

February 2021

Tracking economic and industry trends amidst COVID-19©2021 Deloitte Touche Tohmatsu India LLP 2

The table of contents

Government

Mobility

Market Sentiments

Credit

Consumer demand

Trade

Investment and

production

Industrial production

Economy

Agriculture

TMT

ER&I

LSHC

FSI

Consumer


COVID-19 has had an unprecedented impact on growth. Inflation eased but weak labour market remains a concern

Growth contracted for two consecutive quarters in FY2021 suggesting economy is technically in recession Government spending contracted more than private consumption and investment in Q2 FY 2021

Economy

-50

-30

-10

10

30

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2

FY 2018 FY 2019 FY 2020 FY 2021

% YoY The four growth engines of real GDP

Private consumption Government consumption

Total fixed investment Exports, goods & services

-25

-20

-15

-10

-5

0

5

10

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2

FY 2018 FY 2019 FY 2020 FY 2021

% YoY Real GDP growth

Unemployment rate marginally improved in Jan 2021 as hiring activity resumed in certain sectors CPI consistently declined post October due to steep fall in food prices; now within RBI’s threshold rate

0

5

10

15

20

25

30

% Unemployment rate

0

2

4

6

8

10

12

14

16

Sep-19 Nov-19 Jan-20 Mar-20 May-20 Jul-20 Sep-20 Nov-20 Jan-21

% YoY Consumer price inflation

CPI: overall Core Food

Sources: CMIE, MOSPI


Gradual removal of lockdown restrictions has improved mobility

Congestion levels improving and are in the vicinity of pre-COVID-19 levels Mobility is improving around residential places, for essential needs only

E-way bills for goods transportation recorded strong growth; signals return to pre-COVID normalcy Domestic air passenger traffic improved amid festive season, but remains far below pre-crisis levels

0

10

20

30

40

50

60

70

Dec-19 Jan-20 Feb-20 Mar-20 Apr-20 May-20 Jun-20 Jul-20 Aug-20 Sep-20 Oct-20 Nov-20 Dec-20 Jan-21

Nos in million E way bills generated

Sources: CMIE, Google mobility, Deloitte economic tracker

Mobility

0

10000

20000

30000

40000

Nov-19 Jan-20 Mar-20 May-20 Jul-20 Sep-20 Nov-20

'000 Numbers Airport traffic: Passengers handled*

Note: * Includes both domestic and international passengers

0%

10%

20%

30%

40%

50%

60%

70%

80%

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Average %

Months in 2020

Monthly average % of traffic congestion level

Bengaluru Delhi Mumbai

-100

-80

-60

-40

-20

0

20

40

March April May June July August Sep Oct Nov Dec Jan Feb (till13 Feb)

% change India mobility indicator (average % change from the baseline)

Retail and recreation Grocery and pharmacyParks Transit stationsWorkplaces Residential

https://www.google.com/covid19/mobility/


Business sentiments regain; bull rally in capital markets continued

Sources: CMIE, NCAER quarterly report

Consumer confidence index recovers with reduced infections and increased mobility Business sentiment improves with commencement of vaccination drive and positive economic outlook

Equity purchase by foreign investors slowed down in January 2021; lowest in the last four months The bull rally in equity market continued post announcement of the union budget 2021-22

40

50

60

70

80

90

100

110

Mar-19 May-19 Jul-19 Sep-19 Nov-19 Jan-20 Mar-20 May-20 Jul-20 Sep-20 Nov-20 Jan-21

Index Consumer confidence index

20

40

60

80

100

120

140

Mar-19 Jun-19 Sep-19 Dec-19 Mar-20 Jun-20 Sep-20 Dec-20

Index Business expectation index

4000

8000

12000

16000

25000

30000

35000

40000

45000

50000

24-Feb-20 15-Apr-20 5-Jun-20 26-Jul-20 15-Sep-20 5-Nov-20 26-Dec-20 15-Feb-21

IndexIndex Capital markets

S&P BSE Sensex (30) NIFTY-50 (RHS)

-1,500

-1,000

-500

0

500

1,000

Nov-19 Jan-20 Mar-20 May-20 Jul-20 Sep-20 Nov-20 Jan-21

INR billion Net investments by foreign institutional investors (FIIs)

Debt Equity

Market sentiments


Consumer spending inclined more towards health and well-being products, and less on discretionary items

Sources: CMIE, Deloitte consumer tracker

Discretionary spending improving; the hospitality sector recovery may take a while Both rural and urban demand have been growing at healthy pace since November

Rise in credit card transactions indicates that urban consumer spending is gradually rebounding

First four weeks of survey vs. last four weeks (% of respondents in a sample)

Survey has been capturing responses of these individuals every alternate weeks since 19 April and each survey is reported as Waves. Wave 1 refers to survey dates between April 15 – April 17; Wave 145survey date is 03 Feb 2021.

Less

dis

cret

ion

ary

Mo

re d

iscr

etio

nar

y

Consumer demand

-120

-100

-80

-60

-40

-20

0

20

40

Dec-19 Jan-20 Feb-20 Mar-20 Apr-20 May-20 Jun-20 Jul-20 Aug-20 Sep-20 Oct-20 Nov-20 Dec-20

% YoY Industrial production of consumer goods

Durable goods (proxy for urban demand)

Non-durable goods (proxy for rural demand)

0

50

100

150

200

250

0

200

400

600

800


MillionINR billionCredit card transactions

Value Number (RHS)

62%

56%

38%

57%

53%

18%

54%

-16%

-12%

-6%

3%

5%

-10%

42%

38%

53%

50%

37%

51%

41%

30%

47%

13%

13%

14%

30%

22%

6%

31%

46%

Groceries

Everyday household goods

Utilities

Health care

Medicines

Housing

Internet/mobile phone

Travel

Restaurants/takeout food

Furnishings

Clothing/apparel/footwear

Electronics

Alcohol

Cable TV

Savings

Spending pattern (share of wallet)

Wave 1 Wave 15


Industrial sectors’ activities picking up, yet new project announcements remain low

Source: CMIE

New projects continued to decline as companies shelve capex plans Railways freight traffic hits record high; suggests gradual revival of commercial and industrial sectors

Production of finished steel reaches pre-COVID levels led by demand from infrastructure activitiesCategories of diesel consumption suggests that recovery in the road transport remain modest but

industrial activity paces up

-80

-60

-40

-20

0

20

40

60

80

100

Jan-20 Feb-20 Mar-20 Apr-20 May-20 Jun-20 Jul-20 Aug-20 Sep-20 Oct-20 Nov-20 Dec-20 Jan-21

% YoY Diesel consumption*

High speed diesel oil Light diesel oil

0

2000

4000

6000

8000

10000‘000 tonnes Production of finished steel

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

0

2000

4000

6000

8000

1QFY19 2QFY19 3QFY19 4QFY19 1QFY20 2QFY20 3QFY20 4QFY20 1QFY21 2QFY21 3QFY21

Nos.INR billion New projects announcement

Value Count (RHS)

60

70

80

90

100

110

120

130


Million tonnes Railway freight traffic

* High speed diesel oil is primarily used for vehicles, light diesel oil is used for lower RPM engines, boilers furnaces.

Investment and production


Industrial production index marginally improved in December while recovery in the services sector gains traction

Sources: CMIE, Ministry of statistics and programme implementation (MOSPI)

Industrial production records marginal expansion in December after contracting in November Manufacturing sector activity returns to positive growth due to new orders and rise in exports

Steel and cement output contracted in December due to low construction activity and slow demand Both manufacturing and capital goods return to positive growth as demand conditions normalize

-100

-80

-60

-40

-20

0

20

40


% YoY Core industries output

Coal Steel Cement

-100

-80

-60

-40

-20

0

20

40

Oct-19 Dec-19 Feb-20 Apr-20 Jun-20 Aug-20 Oct-20 Dec-20

% YoY IIP: Manufacturing, Construction and capital goods

Manufacturing Construction goods Capital goods

-70

-60

-50

-40

-30

-20

-10

0

10

20


% YoY Industrial production* and index of eight core industry

IIP: Total Index of eight core industries

Note: * In a press release dated June 12, 2020, NSO has stated that it would not be appropriate to compare the IIP of April 2020 with indices of earlier months. The growth rates in the tabulation are calculated by CMIE from the index numbers.

Industrial activity

0

10

20

30

40

50

60

70

Dec-19 Jan-20 Feb-20 Mar-20 Apr-20 May-20 Jun-20 Jul-20 Aug-20 Sep-20 Oct-20 Nov-20 Dec-20 Jan-21

Index Purchasing Manager’s index (PMI)

Manufacturing PMI Services PMI

Index = 50


Credit growth to services, MSEs improved while to industry and NBFCs continued to decline

Sources: CMIE, RBI

Bank credit growth to commercial sector witnessed a slight rise post October Vehicle and housing loans continued to perform well due to surge in demand

Credit growth to industry continued to contract as companies postponed capex plans Bank credit to MSEs improved post May supported by measures from the Government and RBI

-5

0

5

10

15

20

25

30

35


% YoY Scheduled commercial banks (SCBs) credit for personal loans

Housing Credit card outstanding Vehicle loans Total (RHS)

0

5

10

15

20

25

30

35

40

45

Apr-19 Jun-19 Aug-19 Oct-19 Dec-19 Feb-20 Apr-20 Jun-20 Aug-20 Oct-20 Dec-20

% YoY Scheduled commercial banks (SCBs): Credit to NBFCs and MSEs

Micro and small enterprises (MSEs)

Non-bank financial corporations (NBFCs)

-4

-2

0

2

4

6

8

10

12


% YoY Scheduled commercial banks (SCBs): credit growth by sectors

Industry Services

Credit

5

7

9

11

13

15

Sep-18 Jan-19 May-19 Sep-19 Jan-20 May-20 Sep-20 Jan-21

% YoY Total credit to the commercial sector


Imports finally emerged out of contraction after nine consecutive months; currency appreciated against the USD

Source: CMIE

Trade deficit narrowed in Jan 2021 as exports grew faster than imports

Net FDI surged through Aug-Dec 2020 driven by fresh equity investmentsGlobal baltic dry index indicate strong recovery in trade and movements of goods

Rupee continued to appreciate against the US dollar, but not so much against Euro

-80

-60

-40

-20

0

20

Sep-19 Nov-19 Jan-20 Mar-20 May-20 Jul-20 Sep-20 Nov-20 Jan-21

% YoY Trade in goods

Exports Imports

0

200

400

600

800

1000

1200

1400

1600

1800


Index Baltic dry index

External

-5,000

0

5,000

10,000

15,000

20,000

Nov-19 Dec-19 Jan-20 Feb-20 Mar-20 Apr-20 May-20 Jun-20 Jul-20 Aug-20 Sep-20 Oct-20 Nov-20

USD million Net foreign direct investments in India

75

77

79

81

83

85

87

89

91

93

71

72

73

74

75

76

77

28-Feb-20 11-Apr-20 24-May-20 6-Jul-20 18-Aug-20 30-Sep-20 12-Nov-20 25-Dec-20 6-Feb-21

INR/EUINR/USD Exchange rates fluctuation

INR/USD INR/EU (RHS)


Government yields remain low; GST revenue collection improved

Source: CMIE

Government yields remain low and range bound despite uncertainties but has seen an uptick

since the Union Budget Revenue collections started picking up and has improved beyond pre-COVID levels

The policy uncertainty index has stabilised since the lockdown and has remained steady Fiscal deficit widens in December due to higher spending and low revenues

-300,000

-200,000

-100,000

-

100,000

Jan-20 Feb-20 Mar-20 Apr-20 May-20 Jun-20 Jul-20 Aug-20 Sep-20 Oct-20 Nov-20 Dec-20

INR Cr. Central government: Gross fiscal surplus/deficit

-

40,000

80,000

120,000

160,000

INR Cr. Central government revenue: Goods & services tax (GST)

5.7

5.9

6.1

6.3

6.5

10 Feb 20 30 Mar 20 21 May 20 6 Jul 20 18 Aug 20 30 Sep 20 17 Nov 20 1 Jan 21 16 Feb 21

% 10-year government bond yield

0

40

80

120

160

200

Mar-19 May-19 Jul-19 Sep-19 Nov-19 Jan-20 Mar-20 May-20 Jul-20 Sep-20 Nov-20 Jan-21

Index Economic policy uncertainty index (Mean=100)

Government

Tracking economic and industry trends amidst COVID-19 12©2021 Deloitte Touche Tohmatsu India LLP

COVID-19 and emerging industry trends


Agriculture output increased; hike in MSP for all mandated Rabi crops announced for 2021-22

Sources: CMIE, Food Corporation of India, Ministry of agriculture

Fertilizers sales remain high on account of increase in rabi crops cultivation area Sufficient stock of food grains available with the Food Corporation of India

Increase in MSP for Rabi crops will boost production and reduce imports Area sown hits record high during 2020-21 rabi season

0

10

20

30

40

50

60


Million tonnes Food grains stock in central pool

Rice* Wheat Coarsegrains

0 1 2 3 4 5 6 7

Masur (Lentil)

Rapeseed/Mustard

Barley

Gram

Wheat

Safflower

% YoY

Crop MSP for 2020-21 rabi marketing year

* Includes unmilled paddy

0

3000

6000


‘000 tonnes Fertilizer sales

56

58

60

62

64

66

68

70

2016-17 2017-18 2018-19 2019-20 2020-21

Million hectares Progress of sowing of rabi crops as on 29 January

Agriculture

http://fci.gov.in/stocks.php?view=46


Shift to remote working and higher tariff plans increased broadband subscribers and wireless data traffic

Sources: CMIE, VIL quarterly report, Airtel Quarterly KPIs, RIL Quarterly Results

Broadband subscribers base improved since the pandemic but annual growth rate has been falling

*Average Revenue Per User (ARPU) is the average billing per customer earned by the telecom company every month. It is the total revenue earned by the company divided by the total active users for a particular time period.Fiber to the home (FTTH) is the delivery of a communications signal over optical fiber from the operator's switching equipment all the way to a home or business

Technology, media and telecommunication

Reliance Jio became the first operator to cross 400 million subscribers Migration to higher tariff plans increased ARPUs for Bharti Airtel and Reliance Jio

Strong engagement across mobility and FTTH* services boosted data traffic

0

50

100

150

200

250

300

350

400

450

3QFY2020 4QFY2020 1QFY2021 2QFY2021 3QFY2021

Million Number of subscribers

Bharti Airtel Vodafone Idea Reliance Jio Infocomm

90

105

120

135

150

165

180


INR Average revenue per user (ARPU)*


9

12

15

18


Gigabytes Wireless data traffic per subscriber


10

15

20

25

30

35

620

640

660

680

700

720

740

760

% YoYMillion Broadband subscribers base and growth

Broadband subscriber base Growth (RHS)

https://www.vodafoneidea.com/investors/results

https://www.airtel.in/about-bharti/equity/results

https://www.ril.com/InvestorRelations/FinancialReporting.aspx


Energy sector gradually recovering after a sharp drop

Sources: CMIE, Petroleum Planning & Analysis Cell (PPAC), Power System Operation Corporation Limited (POSOCO)

Notes: *Natural gas available for consumption= gross production minus the quantity of gas flared/loss by producing companies;** Total LNG imports (long term, spot); $Net production + LNG import

Natural gas consumption has improved as economic activities regain growth

After moderating in Nov, demand for electricity saw a gradual improvement from industrial activities

Production and consumption of petroleum products recovering gradually

-600

-500

-400

-300

-200

-100


Million kwh Electricity surplus/deficit#

0

60

120

180

240

MU Electricity demand by state

Jun-20 Feb-20 Mar-20 Apr-20

Sep-20 Oct-20 Nov-20 Dec-20

Electricity demand has moderated across all states in the past two months

#Surplus/ deficit is the difference between the electricity required and electricity supplied

Energy, resources and industrials

0

10

20

30


Million MT Petroleum products - production, consumption, export, and imports

Production Consumption

Exports Imports

1

2

3

4

5

6


BCM Natural gas - production, imports, and consumption

Net production* Imports** Consumption$

https://www.ppac.gov.in/index.aspx

https://posoco.in/reports/monthly-reports/


Drug exports are likely to increase with the commencement of COVID-19 vaccines supply globally

Sources: CMIE; Indian council of medical research

Production of pharmaceuticals increased supported by price and new product growth

Government testing labs have ramped up significantly

Exports of drugs revived after April and is increasing

Number of samples tested rising steadily

0

40000

80000

120000

160000

200000

Jul-19 Sep-19 Nov-19 Jan-20 Mar-20 May-20 Jul-20 Sep-20 Nov-20 Jan-21

INR million Total import and export of drugs

Import Export

0

400

800

1200

1600

2000

2400

2800

31-Mar 30-Apr 15-May 3-Jun 1-Jul 17-Aug 20-Sep 27-Oct 30-Nov 20-Dec 14-Jan 17-Feb

Labs Testing labs in India

Govt Labs Private Labs

0

50

100

150

200

250

17-Apr 11-Jun 15-Aug 15-Oct 15-Dec 15-Feb

Million Tests Total samples tested

8,000

11,000

14,000

17,000

20,000


INR million Production of Pharmaceuticals, Medicinal Chemical and Botanical Products

Life sciences and healthcare

https://www.icmr.gov.in/


Deposits are rising faster than credit; indicate lower credit demand and banks’ unwillingness to lend

Sources: CMIE, RBI

The State Bank of India is lending less relative to its deposits when compared with other private banks

Banks shares are performing poorly relative to NIFTY 50 with public sector banks performing lower

Bank deposits are rising faster than bank credit growth

New business premiums of life companies rose strongly; likely to be stable in the medium term

4

5

6

7

8

9

10

11

12

13

Sep-19 Nov-19 Jan-20 Mar-20 May-20 Jul-20 Sep-20 Nov-20

% YoY Total deposits and credit of Scheduled commercial banks (SCBs)

Deposit Credit

-40

-30

-20

-10

0

10

20

30

40

50

0

50

100

150

200

250

300

350

Dec-19 Feb-20 Apr-20 Jun-20 Aug-20 Oct-20 Dec-20

% YoYINR billion New business premium of life insurers

New business premium Growth (RHS)

40

50

60

70

80

90

100

110

120

130

3 Jan 20 1 Mar 20 28 Apr 20 25 Jun 20 22 Aug 20 19 Oct 20 16 Dec 20 12 Feb 21

Index NSE Sensex

Nifty 50 Nifty PSU Bank Nifty Bank

60

65

70

75

80

85

90

95

100

2QFY19 3QFY19 4QFY19 1QFY20 2QFY20 3QFY20 4QFY20 1QFY21 2QFY21 3QFY21

% Credit deposit ratio

State Bank Of India HDFC Bank Ltd.

ICICI Bank Ltd. Axis Bank Ltd.

Financial services


The auto and garments segments witness strong rebound; consumer durables are performing better than overall BSE index

Source: CMIE

Consumer durable industry equity indices perform better than the overall index

Exports of garment are improving and have moved above pre-COVID levels

Domestic car sales significantly increased with improved mobility; vehicle registration tapered in January

Growth in cargo traffic movement at ports and airports improved since June

-100

-80

-60

-40

-20

0

20

0

20000

40000

60000

80000

100000

120000


% YoYINR millionExport of readymade garments from India

Exports Growth (RHS)

-100

-80

-60

-40

-20

0

20

40


% YoY Cargo traffic at ports and airports

Cargo handled at ports Air cargo traffic

0

50

100

150

200

250

300

350

0

500

1000

1500

2000

2500


Nos. in ‘000Nos. in ‘000Total motor vehicles registered* and sales of passenger vehicles#

Vehicles registered* Domestic sales of cars (RHS)

60

80

100

120

140

3-Jan-20 1-Mar-20 28-Apr-20 25-Jun-20 22-Aug-20 19-Oct-20 16-Dec-20 12-Feb-21

Index BSE SensexSensex 30

BSE Consumer durable index

BSE Consumer discretionary goods & services index

BSE FMCG Index

* Motor vehicles include both commercial and non-commercial vehicles# Include passenger cars, vans and MUVs

Consumer

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This material is prepared by Deloitte Touche Tohmatsu India LLP (DTTILLP). This material (including any information contained in it) is intended to provide general information on a particular subject(s) and is not an exhaustive treatment of such subject(s) or a substitute to obtaining professional services or advice. This material may contain information sourced from publicly available information or other third party sources. DTTILLP does not independently verify any such sources and is not responsible for any loss whatsoever caused due to reliance placed on information sourced from such sources. None of DTTILLP, Deloitte Touche Tohmatsu Limited, its member firms, or their related entities (collectively, the “Deloitte Network”) is, by means of this material, rendering any kind of investment, legal or other professional advice or services. You should seek specific advice of the relevant professional(s) for these kind of services. This material or information is not intended to be relied upon as the sole basis for any decision which may affect you or your business. Before making any decision or taking any action that might affect your personal finances or business, you should consult a qualified professional adviser.

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Documents

Tracking economic and industry trends amidst COVID-19...Feb 24, 2021 · Jan-20 Feb-20 Mar-20 Apr-20 May-20 Jun-20 Jul-20 Aug-20 Sep-20 Oct-20 Nov-20 Dec-20 Jan-21 Million tonnes