India: The economic pathway

May 2021
India’s Covid-19 Update

Pandemic progress: Is the worst really over?

Daily recoveries outpace the new coronavirus infections Top 7 Indian states accounting for 74% of the total active caseload as on
May 31, 2021
5,00,000
3,92,576 Odisha 0.83
4,00,000 West Bengal 0.95
3,00,000 2,54,879 Andhra Pradesh 1.66
3,08,688
2,00,000 Kerala 2.24
1,00,000 Maharashtra 2.75
1,26,649
Tamil Nadu 3.06
0
17-May-21 Karnataka 3.42
01-May-21

03-May-21

05-May-21

07-May-21

09-May-21

11-May-21

13-May-21

15-May-21

19-May-21

21-May-21

23-May-21

25-May-21

27-May-21

29-May-21

31-May-21
0.00 0.50 1.00 1.50 2.00 2.50 3.00 3.50 4.00
Lakhs

Daily Confirmed Daily Recovered

Active Cases as on 31st May 2021
Source: PRS Legislative Research
Source: Covid-19 India

Cumulative Vaccination Progress Report: 8 States leading the way India at the second spot with 28.2 Million Covid-19 cases reported so far

Germany 3.7
Bihar 1.02 Argentina 3.8
Madhya Pradesh 1.09 Italy 4.2
Karnataka 1.34 UK 4.5
West Bengal 1.44 Russia 5.1
Rajasthan 1.69 Turkey 5.2
Gujarat 1.69 France 5.7
Uttar Pradesh 1.80 Brazil 16.5
Maharashtra 2.23 India 28.2
USA 34.0
0.00 0.50 1.00 1.50 2.00 2.50
0.0 5.0 10.0 15.0 20.0 25.0 30.0 35.0 40.0
Crore
Million
Note: Data as on 31st May 2021
Source: Ministry of Health & Family Welfare Source: Worldometer
2
Growth Update

Economy witnesses sequential improvement in Q4-FY21

Indian economy records a growth of 1.6% in Q4-FY21. GFCF inched up to 31.2% in Q4-FY21 (Highest in twenty-six quarters)
Thus, economy grew at -7.3% in FY21.

10.00 35
5.4 4.6
5.00 3.3 3.0 30
1.6 31.2
0.5 30.7
0.00 28.2 28.7
25 27.5 26.9 27.6

-5.00

% OF GDP
20
-7.4 20.7
% -10.00
15
-15.00
10
-20.00
5
-25.00
-24.4
0
-30.00

Q1 FY20

Q2 FY20

Q3 FY20

Q4 FY20

Q1 FY21

Q2 FY21

Q3 FY21

Q4 FY21
Q3 FY20

Q2 FY21
Q1 FY20

Q2 FY20

Q4 FY20

Q1 FY21

Q3 FY21

Q4 FY21

Source: MOSPI Source: MOSPI

3
Sector Update

Base effect props up Manufacturing , PMIs not too encouraging

IIP rose by 22.4% in March 2021. (Fastest in the 2011-12 base series) Core PMI-Manufacturing slumps to a 10-month low in May’21. PMI-Services retreats
output recorded double-digit growth of 56% in April 2021 in April’21

IIP Core sector 70 PMI-Mfg PMI -Services

80.00
60
60.00 50.8
50 54
40.00 56.0
22.4 40
20.00
-3.4 27.4
30
% 0.00 11.3
20
-20.00

10
-40.00
5.4
-60.00 0

DEC-20
APR-20

AUG-20

FEB-21

APR-21
SEP-20

MAR-21
MAY-20

JUL-20

OCT-20

MAY-21
JUN-20

NOV-20

JAN-21
-80.00
APR-20

AUG-20

DEC-20

FEB-21

APR-21
MAR-20

SEP-20

MAR-21
MAY-20

JUL-20

OCT-20

NOV-20

JAN-21
JUN-20

Source: MOSPI Source: IHS markit

4
 Price Update

Inflationary pressures upward bound: producers gain while consumers lose

Wholesale inflation rose to 10.5% in April 2021 (Highest since 2012): Retail inflation cooled to 4.3% in April 2021

CPI WPI

12.0
10.5
10.0
7.4
8.0

6.0

4.0 5.5
% 4.3
2.0

0.0

-2.0

-4.0

-6.0
SEP-20
MAY-20

OCT-20

NOV-20

DEC-20

JAN-21
APR-20

JUN-20

AUG-20

FEB-21

APR-21
MAR-21
JUL-20

Source: MOSPI

5
 Fiscal Update

Lockdown effects: GST collections up in April, E-Way bills lower in April-May

GST Collections rose to Rs. 1,41,384 crore in April’21 E-Way bills declined to Rs.3.8 crores in May’21
8.0

1,41,384
1,60,000 7.1
7.0

1,23,902
6.4 6.4

1,19,847
6.3 6.4
1,40,000

1,15,174

1,13,143
5.7 5.8 5.9
1,05,155

1,04,963
6.0
1,20,000
95,480

4.9
90,917

4.8
87,422

5.0
86,449

1,00,000 4.3

Rs. Cr.
3.8
Rs. Cr.

4.0
62,009

80,000

60,000 3.0
2.5
32,294

40,000 2.0

20,000 0.9
1.0

-
0.0
Jul-20
Jun-20
Apr-20

May-20

Dec-20

Apr-21
Aug-20

Nov-20
Sep-20

Jan-21

Feb-21

Mar-21
Oct-20

Source: Ministry of Finance Source: GSTN

6
Banking and Debt issuances Update

Debt and credit markets subdued this year

Bank deposits remain in the positive territory while Bank credit contracts in FY22 Corporate Bond issuances fell in May 2021

2.5 1,20,000
2.1

97,035
2
1,00,000

78,702
1.5

71,729
80,000

62,892
61,868

60,094
1

54,466
0.7

52,786
Rs. Crore

47,384
46,694
60,000
0.5
%

40,397
0

25,941
40,000

22,836
Bank Deposits Bank Credit
-0.5
20,000
-0.7
-1
-1.1 -

Jul-20
Jun-20

Jan-21
May-20

Sep-20

Nov-20

Apr-21

May-21
Aug-20

Dec-20

Feb-21

Mar-21
Oct-20
-1.5

1st April-7th May 2020 1st April-7th May 2021

Source: RBI Source: Prime Database Note: (Data extracted on June 1, 2021)

7
 Capital Markets Update

Equities rally, FPI inflows rise & G-sec yields soften

Equity markets rallied during the month with Sensex ending close to the Net FPI flows turn marginally positive during May 2021
52,000-mark
53,000 51,937 12.0
9.6 9.8
52,000 10.0 8.3
7.3
8.0

USD Billion
51,000 6.0
3.0 3.7
50,000 4.0 2.0 2.6 2.6
48,719 2.0 1.0 1.3 1.1
49,000 0.2 0.1 0.2
- -0.1 0.0
48,000 -2.0
-0.7 -0.4 -1.7 -1.8
47,000 -4.0

May'22
Dec'20

Jan'21

Feb'21

Mar'21

Apr'22
Nov'20
46,000

Equity Debt Total

Source: BSE India

Note: Data till May 28, 2021
Source: NSDL

10-year G-Sec Yield (%) softened further to 5.99% in May 2021 from 6.07% in the previous month
6.3
6.2
6.1 6.19

6 6.09 6.07
6.05
% 6.00 6.00
5.9 5.99
5.96
5.92
5.8 5.88 5.87 5.89
5.81
5.7
5.6
SEP-20
MAY-20

OCT-20

MAY-21
AUG-20

NOV-20

JAN-21
JUN-20

DEC-20

FEB-21

MAR-21

APR-21
JUL-20

Source: FIMMDA; Average for December has been computed based on the new benchmark GSec 5.85%
8
External Sector Update

Exports & Imports soar, Trade deficit narrows

Exports & Imports witnessed double-digit growth in May’21 owing to a Trade Deficit narrowed to USD 6.3 billion during May 2021
favourable base effect

0.7
250 201.1 2.0
Exports Imports
0.0
200
-2.0
150 -4.0
67.41

-3.0
US $ billion

-3.6
100

-9.2
-8.2
167.6 -6.0

-5.3
%

-6.3
50 -8.0
68.55 -10.0
0 -35.52

-10.2
-12.0
-50 -51.03 -14.0

-13.0
Mar-21 -13.9
-100 -16.0

Jan-21 -14.4

Apr-21-15.1
-15.7
MAR-21
APR-21
AUG-20
SEP-20
MAY-20
JUN-20
JUL-20

NOV-20

FEB-21

MAY-21
JAN-21
OCT-20

DEC-20
-18.0

May-20

May-21
Dec-20
Aug-20

Oct-20
Jun-20
Jul-20

Nov-20
Sep-20

Feb-21
Source: Ministry of Commerce and Industry Source: Ministry of Commerce and Industry

Current Account Balance turned negative in Q3-2021

3.71
4

2.37
3

2 0.08

1
%

0
Q1 FY20 Q2 FY20 Q3 FY20 Q4 FY20 Q1 FY21 Q2 FY21 Q3 FY21
-1

-0.23
-0.36
-1.07

-2
-2.08

-3

Note: + surplus/ - deficit

Source: CMIE
9
External Sector Update

Rupee gains, Forex reserves swell

Currency strengthened by Rs 1.09 paise to Rs. 73.44 against the US Dollar India’s foreign exchange reserves rose to USD 593 Billion in May 2021

650

MAR-21
MAY-20

MAY-21
NOV-20
AUG-20

OCT-20

APR-21
DEC-20
JUN-20

JAN-21

FEB-21
SEP-20
JUL-20

593
600 584
71
71.5

USD BILLION
550
72
72.5
493
73 500
73.44
RS/US $

73.5
74 450
74.5
75 74.47
400

SEP-20

DEC-20
AUG-20

FEB-21

APR-21
MAR-21
MAY-20

JUL-20

OCT-20

MAY-21
JUN-20

NOV-20

JAN-21
75.5
76 75.66

Source: RBI (Data till May 21, 2021)

Source: CMIE

10
Industry Update

Base effects tell on growth in several industries

Manufacturing- Chart 1, 2 and 3: Operational Indicators of major manufacturing industries on a y-o-y basis (Unit: %)

1. Automobiles 2. Consumer Durables 3. Drugs & Pharma,

Gems & Jewellery 7644.0
147237.0
Refrigerator AC
10002.6
-22.6
-17.4
PV

CV

2-3 Wheelers
18.0

-25.6 Drugs and Pharmaceuticals G&J

Note: Production of PV and 2-3 Wheelers is for the month of April Note: Air Conditioner and Refrigerator production is April-March Note: Exports of Drugs and Pharmaceuticals is April-March and
and CV is April-March Exports of G&J is for the month of April

Source: CMIE Source: CMIE Source: CMIE, GJEPC

FMCG- Chart 4 and 5: Cumulative Production on a y-o-y basis (Unit: %)

4. Food Products 5. Non- Food Products

Hair shampoo
15.6

Toothpaste
Detergents

Hair oil
Soaps
16.0
7.3
4.5

-4.7 -4.7
Milk Vegetable Oil Sugar -5.0 -2.2

Note: Vegetable Oil Production is November-March; Milk and Sugar Production is April- Note: Non Food Products Production is April-March
March
Source: CMIE Source: CMIE

11
Industry Update

Curious case of abnormal growth in infra & metals and degrowth in capital goods

Infrastructure and Infra-Allied - Chart 6: Cumulative Operational Capital Goods - Chart 7: Industrial Production: Components of Capital
Indicators on a y-o-y basis (Unit: %) Goods Index (Unit: %)
548.8

Transformers

Construction

Construction
Generators /

Equipment*

machines**
Alternators
equipment
generating

machinery

machinery

machinery
(Small)

Printing
Mining
Power

Textile
Boilers
306.2

20.6

38.7

-8.0
-15.7
Power Pace of Highway Cement -26.3
-35.9 -35.2
construction -45.4 -42.3
-52.9
Note: The above chart denotes growth in Power Generation, Pace of Construction of Note: Production of Capital goods is during April-March; * includes Material handling,
National Highways and Cement Production in the month of April lifting and hoisting equipment; ** incl. bull-dozers and road rollers
Source: Office of the Economic Adviser, Ministry of Roads and Highways Source: CMIE

Metal - Chart 8: Cumulative Production on a y-o-y basis (Unit: %)

400 378.3

145.8
98.5
9.5 12.2

Steel Coal Aluminium Copper Zinc Lead

Note: The above chart denotes growth for the month of April

Source: Ministry of Mines, Office of the Economic advisor

12
Industry Update

Textiles continued to witness negative growth rate

Textiles - Chart 9 and 10: Operational Indicators of major manufacturing industries on a y-o-y basis (Unit: %)

Manmade Filaments & Fibres (MMF)

Cotton Yarn Wearing Apparel

blended spun

Acrylic yarn
Viscose

Texturised
spun yarn
Polyester

yarn

yarn
-18.7

-16.3
-29.8 -25.2
-34.8 -8.0
Note: Production of Cotton yarn and Wearing Apparel (IIP) is April-March Note: Production of MMF is April-March

Source: CMIE Source: CMIE

13
Industry Update

Passengers & cargo handled de-grew or recorded marginal positive growth

Services - Chart 8 and 9: Operational Indicators on various services on a y-o-y basis (Unit: %)

Trend in Passengers Handled IT & Telecom

0.0
12.3
Airlines Railways

0.6 4.7

-87.4 Telephone Subscribers Broadband Subscribers Computer Software

Note: Passengers carried by Scheduled Domestic Airlines is not comparable for the month Note: Telephone and Broadband subscribers is as on 28th February 2021; Exports in
of April due to nil passengers carried in April 2020; Number of passengers booked through Computer Software is April-December
railways is April-February
Source: Ministry of Railways, DGCA Source: TRAI, CMIE

Freight - Chart 10: Cumulative Cargo Handled on a y-o-y basis (Unit: %)

70.7

29.5

-25.7
Airports Ports Railways

Note: The above chart denotes growth/de-growth in Airports during April-March and Ports, Railways
for the month of April
Source: AAI, IPA, Ministry of Railways 14
 Industry Update

Oil & Gas and Chemicals record positive growth rates

Oil & Gas - Chart 11: Cumulative Production on a y-o-y basis (Unit: %) Agri-Allied- Chart 12: Operational Indicators on a y-o-y basis (Unit: %)

30.9 7.0

22.7

1.7

-2.1
Crude Oil Natural Gas Refinery Products Fertilizers Agrochemicals

Note: Production of Fertilizers is for the month of April, Exports of Agrochemicals is April-March
Note: The above chart denotes growth/de-growth in the month of April

Source: MOPNG Source: Office of the Economic Adviser, Ministry of Commerce

15
Economics Research Team

Madan Sabnavis Mradul Mishra

Chief Economist Media Relations
madan.sabnavis@careratings.com mradul.mishra@careratings.com
+91-22-6837 4433 +91-22-6754 3573

Authors
Natasha Trikha Akanksha Bhende
Research Analyst Associate Economist
natasha.trikha@careratings.com akanksha.bhende@careratings.com
+91-22-6837 4345 +91-22-6837 4400

CARE Ratings Limited

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based on information available in public domain. However, neither the accuracy nor completeness of information contained in this report is guaranteed. CARE
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