Economic Performance Of States During COVID-19 – Free PDF Download

• A HEAT MAP based on state-wise Covid-19 data developed by the Department of Economic Affairs in the Union
• Finance Ministry reveals that
• Economic indicators including electricity consumption, e-way bill generation and MNREGA work creation, are looking better in states with higher control over cases and recoveries.

Electricity consumption

• Electricity consumption for the whole country recovered to 106 billion units in June, a sequential improvement from 103 billion units in May.
• Compared with the previous year, the strongest recoveries were seen in Karnataka, Andhra Pradesh, Punjab and Chhattisgarh, according to the data.

E-way bill generation

• The value of e-way bills, suggesting improvement in intra and inter-state movements of goods, also picked up strongly in June over May across states.
• But the rate of year-on-year growth was weaker in states such as Maharashtra, Tamil Nadu, Delhi and Haryana, which recorded a higher number of Covid-19 cases.

MGNREGA work creation

• With reverse migration from urban to rural areas, work created under MGNREGA almost doubled on a year-on-year basis in June to reach 6,403 lakh person days.
• Maharashtra, the biggest Covid-19 hotspot and destination migration state, however, recorded a fall in MGNREGA employment in June both on a YoY and sequential basis, partly due to intra-state migrant workers returning to their jobs in cities.

Impact of reverse migration on states

• The top five migrants receiving states are Maharashtra, Delhi, Haryana, West Bengal and Gujarat.
• The manufacturing firms in Delhi and Haryana are more susceptible to the reverse labour migration than the firms based out of Maharashtra and Gujarat.

But there are some outliers

• Two other economic indicators- GST collections and vehicle registrations were more of outliers, showing no direct correlation with states’ performance on Covid-19 case recoveries.
• Delhi, Tamil Nadu and Karnataka were exceptions though with a strong pickup in vehicle registration in June on a sequential basis, the data showed.

What is the solution?

• India is facing a structural demand problem, one that predates the COVID-19 shock.
• This challenge has been exacerbated over the past few months as jobs have been lost and incomes have collapsed.

But Where is demand going to come from now?

• One option is to turn to those at the bottom of the pyramid who have a high marginal propensity to consume,
• By devising strategies that enhance productivity growth in the informal economy that allows for productivity increase in the informal sector increases the incomes of low-wage workers.
• Another way of achieving this is by raising the minimum wages of the worst-off workers.

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