Tracking economic and industry trends amidst COVID-19

Tracking economic and industry trends amidst COVID-19

29 October 2020

Tracking economic and industry trends amidst COVID-19©2020 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

Growth contracted in Q1 FY2021 by a magnitude never seen before Private demand and trade contracted while government spending increased

Economy

-50

-30

-10

10

30

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

FY 2018 FY 2019 FY 2020 FY2021

% 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

FY 2018 FY 2019 FY 2020 FY2021

% YoY Real GDP growth

The unemployment rate recovered after the unlock, and labour participation rate improved Food prices remained elevated due to supply disruption caused by regional lockdowns

0

5

10

15

20

25

30

26-Jan-20 25-Feb-20 26-Mar-20 25-Apr-20 25-May-20 24-Jun-20 24-Jul-20 23-Aug-20 22-Sep-20 22-Oct-20

% Unemployment rate

0

2

4

6

8

10

12

14

16

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

% 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

Tourist arrivals have plunged since movement restrictions Suspension of international flights impacting flight activities off late

0

200

400

600

800

1000

1200

1400

Oct-19 Nov-19 Dec-19 Jan-20 Feb-20 Mar-20

Nos in ‘000 Foreign tourist arrivals in India

Sources: CMIE, Google mobility, Deloitte economic tracker

Mobility

-100

-80

-60

-40

-20

0

20

40

Retail andrecreation

Grocery andpharmacy

Parks Transit stations Workplaces Residential

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

March April May June July August Sep Oct (till 23rd Oct)

0

2000

4000

6000

8000

No of flights Scheduled vs. departed flights

Scheduled Departed

0%

10%

20%

30%

40%

50%

60%

1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35 37 39 41 43

Average %

Weeks in 2020

Weekly average % of traffic congestion level

Bengaluru Delhi Mumbai

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


While the market sentiments dip, capital markets continued with an upward trend

Sources: CMIE, NCAER quarterly report

Consumer confidence index further plunges due to economic uncertainty and job losses ..business sentiment recovers in Sep as new orders, sales, and production recommence

FIIs turned into net sellers of equities and buyers of debt instruments in September Valuation of Indian stocks have risen back to pre-COVID-19 levels over the past two months

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

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

Index Business expectation index

7000

8000

9000

10000

11000

12000

20000

24000

28000

32000

36000

40000

44000

IndexIndex Capital markets

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

-1,400

-1,200

-1,000

-800

-600

-400

-200

0

200

400

600

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

INR billion Net investments by foreign institutional investors (FIIs)

Debt Equity

Market sentiments


Consumers are reluctant to spend on discretionary items in the near future. Is rural demand faltering?

Sources: CMIE, Deloitte consumer tracker

Consumers continued to spend more on less-discretionary items including groceries, internet Urban demand recovers while low wages is impacting rural demand

Rise in credit card transactions indicates that 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 11 was published as on 03 Oct 2020.

62%

56%

38%

57%

53%

18%

54%

-16%

-12%

-6%

3%

5%

-10%

42%

38%

49%

48%

34%

50%

38%

19%

47%

-21%

-15%

-4%

13%

14%

-9%

28%

36%

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 11

Less

dis

cret

ion

ary

Mo

re d

iscr

etio

nar

y

0

50

100

150

200

250

0

200

400

600

800

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

MillionINR billionCredit card transactions

Value Number (RHS)

-120

-100

-80

-60

-40

-20

0

20

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

% YoY Industrial production of consumer goods

Durable goods (proxy for urban demand)

Non-durable goods (proxy for rural demand)

Consumer demand


Industry investment and production picking up lately, yet investments on new projects remain low

Source: CMIE

New projects declined sharply, and industries suffer excess capacity Railways freight traffic sees an uptick as economic activity recovers

Production of finished steel recovered, led by demand from infrastructure activities and auto sector Diesel consumption sees improvement due to gradual opening of the industrial sector

-80

-60

-40

-20

0

20

40

60


% YoY Diesel consumption*

High speed diesel oil Light diesel oil

0

2000

4000

6000

8000

10000

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

‘000 tonnes Production of finished steel

0

200

400

600

800

1,000

1,200

1,400

1,600

0

2000

4000

6000

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

Nos.INR billion New projects announcement

60

70

80

90

100

110

120


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 activity, including services, is gradually catching up to pre-COVID-19 levels

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

Industrial activity recovering gradually from lows during the lockdown Manufacturing sector activity returns to positive growth, services yet to grow but improving since July

Coal and steel output improving as industrial activities resumed; construction activities also resuming Recommencement of stalled investment projects driving production of construction and capital goods

0

10

20

30

40

50

60

70

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

Index Purchasing Manager’s index (PMI)

Manufacturing PMI Services PMI

-100

-80

-60

-40

-20

0

20

40

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

% YoY Core industries output

Coal Steel Cement

-100

-80

-60

-40

-20

0

20

40

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


Credit growth has been moderating, lending to industry, services, and NBFCs declined

Sources: CMIE, RBI

Bank credit growth to commercial sector continues to decline Vehicle loans continued to perform well, while other categories saw a modest growth

Credit offtake by industry and services has been low relative to June and July Bank credit to MSEs improved post May, but lending to NBFCs fell

-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)

5

7

9

11

13

15

Sep-18 Nov-18 Jan-19 Mar-19 May-19 Jul-19 Sep-19 Nov-19 Jan-20 Mar-20 May-20 Jul-20 Sep-20

% YoY Total credit to the commercial sector

0

5

10

15

20

25

30

35

40

45

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

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

Micro and small enterprises (MSEs)

Non-bank financial corporations (NBFCs)

0

2

4

6

8

10

12

14

16

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

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

Industry Services

Credit


Exports improved owing to trade in agriculture and chemical products; FDI rose sharply in August

Source: CMIE

Exports grew at a highest pace in over a year, although trade remained in deficit

FDI flows sharply increased in August post a few select dealsGlobal baltic dry index indicate recovery in trade movements of goods

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

-90

-60

-30

0

30

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

% YoY Trade in goods

Exports Imports

-5,000

0

5,000

10,000

15,000

20,000

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

USD million Net foreign direct investments in India

0

500

1000

1500

2000

2500

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

Index Baltic dry index

External

75

77

79

81

83

85

87

89

91

71

72

73

74

75

76

77

24-Feb-20 25-Mar-20 24-Apr-20 24-May-20 23-Jun-20 23-Jul-20 22-Aug-20 21-Sep-20 21-Oct-20

INR/EUINR/USD Exchange rates fluctuation

INR/USD INR/EU (RHS)


Government yields remain low; GST revenue collection improves

Sources: CMIE, Haver Analytics

Government yields remain low and range bound despite uncertainties Revenue collections started picking up since May; although fell in Aug due to reduced imports

Policy uncertainty index witnessed an uptick after a drop in June The fiscal deficit improved in September as Government expenditure fell

-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

INR Cr. Central government: Gross fiscal surplus/deficit

-

10,000

20,000

30,000

40,000

50,000


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

5.7

5.9

6.1

6.3

6.5

10 Feb 20 24 Mar 20 13 May 20 23 Jun 20 31 Jul 20 9 Sep 20 20 Oct 20

% 10-year government bond yield

0

40

80

120

160

200

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

Index Economic policy uncertainty index (Mean=100)

Government

Tracking economic and industry trends amidst COVID-19 12©2020 Deloitte Touche Tohmatsu India LLP

COVID-19 and emerging industry trends


The agriculture output increased; a good rainfall bodes well for the industry

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

Fertilizers sales grew significantly on account of increase in kharif crops sowing Sufficient stock of food grains available with the Food Corporation of India

Hike in MSP likely to raise prices of pulses and oilseeds Kharif crops sowing higher in Aug-Sep 2020 compared to last two years

0

10

20

30

40

50

60

70


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

9000


‘000 tonnes Fertilizer sales

0

20

40

60

80

100

120

June July Aug Sep

Million hectares Progress of sowing of kharif crops (actual area)

2018 2019 2020

Agriculture

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


Broadband subscriber base improved since April; average revenue per user (ARPU) improved

Note: Q2 results will be released on 30th October 2020Sources: CMIE, VIL quarterly report, Airtel Quarterly KPIs, RIL 4Q Release

Growth in broadband subscriber base improved since April

*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.

Technology, media and telecommunication

Reliance Jio sees a rapid increase in subscribers Airtel’s average revenue per user is the highest; Vodafone Idea sees a decline

Wireless data traffic per subscriber improved in Q1

15

20

25

30

35

40

560

580

600

620

640

660

680

700

720

% YoYMillion Broadband subscribers base and growth

Broadband subscriber base Growth (RHS)

0

50

100

150

200

250

300

350

400

1QFY2020 2QFY2020 3QFY2020 4QFY2020 1QFY2021

Million Number of subscribers

Bharti Airtel Vodafone Idea Reliance Jio Infocomm

90

105

120

135

150

165


INR Average revenue per user (ARPU)*


6

9

12

15

18


Gigabytes Wireless data traffic per subscriber


https://www.vodafoneidea.com/content/dam/vodafone-microsite/docs/pdf/resultspending/VIL_QR_Q4FY20.pdf

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

https://www.ril.com/getattachment/6abfccb3-d337-45a7-bbd5-e18270bff746/Financial%20performance%20for%20the%20year%20ended%2031%20Mar,%202020.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 with the rise in production

Electricity requirement is gradually picking up

Production and consumption of petroleum products recovering gradually

-600

-500

-400

-300

-200

-100


Million kwh Electricity surplus/deficit#

0

50

100

150

200

250

MU Electricity demand by state

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

Electricity demand has been highest in North India (Delhi, UP and Haryana), lags in South

#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

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

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 and production of several pharma products revived after April

Sources: CMIE; Indian council of medical research

Production of pharmaceuticals has improved to pre-COVID-19 capacities and is stable

Government testing labs have ramped up significantly

Exports of drugs improved since April; imports remained stagnant

Number of samples tested rising steadily

0

40000

80000

120000

160000

200000

INR million Total import and export of drugs

Import Export

0

400

800

1200

1600

2000

2400

31-Mar 30-Apr 15-May16-May23-May 3-Jun 20-Jun 1-Jul 12-Jul 25-Jul 17-Aug 30-Aug 20-Sep 30-Sep 27-Oct

Labs Testing labs in India

Govt Labs Private Labs

0

20

40

60

80

100

120

17-Apr 20-May 5-Jun 27-Jun 15-Jul 30-Jul 10-Aug 20-Aug 30-Aug 10-Sep 20-Sep 30-Sep 10-Oct 20-Oct

Million Tests Total samples tested

8,000

11,000

14,000

17,000


INR million Production of Pharmaceuticals, Medicinal Chemical and Botanical Products

Life sciences and healthcare

http_s:/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 more relative to other private banks

Banks shares are performing poorly relative to NIFTY 50

Bank deposits are rising faster than bank credit growth

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

4

5

6

7

8

9

10

11

12

13

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

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

Deposit Credit

-40

-20

0

20

40

60

80

100

0

50

100

150

200

250

300

350


% YoYINR billion New business premium of life insurers

New business premium Growth (RHS)

40

50

60

70

80

90

100

110

01/2020 02/2020 03/2020 04/2020 05/2020 06/2020 07/2020 08/2020 09/2020 10/2020

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

% Credit deposit ratio

State Bank Of India HDFC Bank Ltd.

ICICI Bank Ltd. Axis Bank Ltd.

Financial services


Demand for auto and garments revived; gradual recovery in cargo traffic

Source: CMIE

Consumer industry shares perform better than the overall index

Exports of garment is improving and has moved above pre-COVID levels

Domestic car sales have significantly increased with improved mobility

Growth in cargo traffic movement at ports and airports has not improved since June

-100

-80

-60

-40

-20

0

20

0

20000

40000

60000

80000

100000

120000

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

% YoYINR millionExport of readymade garments from India

Exports Growth (RHS)

-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

% YoY Cargo traffic at ports and airports

Cargo handled at ports Air cargo traffic

0

50

100

150

200

250

300

0

500

1,000

1,500

2,000

2,500


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

Vehicles registered* Domestic sales of cars (RHS)

60

70

80

90

100

110

120

3-Jan-20 1-Feb-20 1-Mar-20 30-Mar-20 28-Apr-20 27-May-20 25-Jun-20 24-Jul-20 22-Aug-20 20-Sep-20 19-Oct-20

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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Tracking economic and industry trends amidst COVID-19