End of phase 1: will we see some economic activity picking up?

I’ll start with a data story we did for Hindustan Times this week. The government this week announced its intent to partially open up the districts with no cases in the past 28 days to limited economic activity. It calls these districts green zones according to one government notification. It then depends on individual state governments to use this dynamic classification and decide which districts need a stricter lockdown, and where it can be relaxed. We mapped all of India’s districts using this classification, and on the face of it, that’s a lot of green.

But the question remains. Will opening up of these “green zones” lead to some revival in the economy? To try to answer this, we looked at credit flows to districts. Credit flows can be a wholesome indicator to compare levels of economic activity across geographies.

45% of India’s districts currently lie in these green zones. However, they accounted for just 7% of the total credit flowing within the country. Two of India’s largest metros, also with the highest number of cases, accounted for a third of the total credit in the country. Mumbai – 21% and Delhi – 12%. Additionally, many of the districts which have been categorized as hotspots are economic centers within their respective states. So, economic activity within states will also suffer as long as these centers are under lockdown.

The migrant crisis is yet to play out

Last week, we yet again saw large amounts of migrants moving towards railway stations to attempt to get back to their native towns and villages. Given the vast migrations spreads throughout the country, we believe this crisis is far from over. The districts which have been classified as red zones (districts with large outbreaks), are home to 57% of all internal domestic migrants moving for work. Conversely, 45% of India’s districts where some relaxation in lockdown can be expected account for just 11% of all migrants.

This presents a rather convoluted scenario for the migrants who will be stuck in place outside their home states with no work, and no means to get back home.

Then, there are workers employed in factories. The three industrial states of Maharashtra, Tamil Nadu and Gujarat account for more than 40% of all people employed in factories. These are industries which most definitely cannot work from home. Both Maharashtra and Tamil Nadu have significant number of districts classified under hotspots, either with large outbreaks or clusters. These districts will not see a relaxation in the lockdown imposed for quite some time. Gujarat, on the other hand, has only 18% of districts under lockdown, but these include all its industrial clusters – Ahmedabad, Surat, Rajkot and Vadodara.

Andhra Pradesh and Kerala, which have high share of districts as hotspots (85% and 50%) respectively, account for a much smaller share of factory workers (4% and 2%).

It’s going to be a long summer for both the Indian people and the Indian economy.

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