Freight movement, electricity and oil consumption are all showing signs of increasing demand. Unemployment is also falling. Coupled with an expected boom in the rural economy, which supports 70 per cent of India's population, these could substantially temper or even negate the contraction of the economy in the first quarter of this financial year.
There are sound economic reasons for questioning the gloomy predictions about a contraction of the Indian economy this year, which could be overstated.
The International Monetary Fund (IMF) is the latest to join the bandwagon of doomsayers, with its prognosis of the Indian GDP declining by 4.5 per cent this year. HSBC has predicted a 7.2 per cent contraction; international ratings agency, S&P, feels it will decline 5 per cent, and even the Reserve Bank of India (RBI), India's central bank, has said the economy could shrink by 1.5 per cent this year.
It's possible that these predictions are not directionally incorrect. The point is that these projections may have overestimated the magnitude of the probable decline while giving much lower weightage to factors that could help mitigate - and with a bit of good fortune, even negate the effects of - the slowdown.
As many as 14 important indicators point to a rapid and significant pick-up in economic activity in India.
There are green shoots of revival visible across various sectors that every agency seems to be overlooking. Even if one ignores, for the moment, the enthusiasm of stock market investors who have taken India's benchmark BSE Sensex beyond 35,000 levels - the doomsayers might say for no good reason - it is a little more difficult to turn a blind eye to raw data. As many as 14 important indicators point to a rapid and significant pick-up in economic activity in India.
There's reason to be optimistic that growth, POST June 30, will pick up smartly in the remaining three quarters and substantially - and, with a little bit of luck, even wholly - wipe out the contraction of the first.
Rail traffic, petroleum and diesel consumption and digital transaction, all important indicators of economic activity, are picking up. Electricity and fuel consumption, greater movement of goods and an increase in financial transactions as well as manufacturing, services, finance and agriculture, are also all swinging back to better health with a vengeance, though they are still at below pre-Covid levels.
Then, the unemployment rate, which had peaked at a quarter of the entire workforce at the height of the lockdown, has fallen sharply. According to data released by the Centre for Monitoring Indian Economy (CMIE), India's unemployment rate declined from 23.5 per cent in April and May to 8.5 per cent for the week ended June 21, revealing it to be back at the level it was at when the lockdown was declared on March 25.