In the initial months of Covid-19 when India faced a nationwide lockdown, Google’s mobility index for groceries and pharmacy (GMI-GP) recovered to as much as 80 per cent of March 1, 2020 levels towards the end of June. Apple Driving Index (ADI), on the other hand, had not even crossed 50 per cent of baseline mobility at the end of Q1, as compared to March 1.
Come Q2, while GMI-GP nearly stagnated, though in a higher range of 80-90 per cent, ADI for Delhi got a boost and recovered to 80 per cent of March 1, 2020 levels in the middle of September. The pickup in ADI happened precisely in the same period when Delhi’s first wave of Covid-19 infections subsided (see chart).
It can be reasonably inferred that the gradual catch-up of ADI with GMI-GP represents improved consumption from the well-off iPhone users, or those who “drive” the majority of private consumption in India.
This is, to be fair, based on these two important assumptions.
Assumption 1: Though only about three per cent of India’s smartphone users have iPhones, majority of Apple iPhone customers fit into the top income/consumption decile in the of population.
Assumption 2: Google users are more broadbased in terms of their consumption or income profile, or a considerably large proportion of both the rich and the poor use phones that provide data to Google
As Private Final Consumption Expenditure (PFCE) forms about 55-60 per cent of India’s gross domestic product (GDP), a readiness to travel and consume more by the financially strongest group, could mean that economy adjusted faster in Q2, FY21.
In simple terms, premium or discretionary spending may have improved considerably in July - September, due to relaxations, and could probably reflect in a hopeful GDP growth number for Q2. On similar lines, the Reserve Bank of India’s estimate of 9.8 per cent contraction in GDP in Q2 was followed by its "Nowcast" model predicting Q2 GDP growth at 8.6 per cent.
While India’s GDP fell 24 per cent in Q1, the National Statistical Office will release the data for Q2 on November 27. The analysis, however, is not an attempt to correlate mobility indices with GDP growth, as the latter depends on numerous other factors.
But applying the same rules to current quarter, Q3, FY21, the recovery in economic activity seems to have stalled. If Q2 seems poised to throw a better-than-expected GDP number, Q3 may well do the reverse. Apple Driving Index has fallen from its peak of November 12 (pre-Diwali) to 75 per cent from March 1 levels now. Google Mobility Index, which had fully recovered as Diwali approached, has now fallen to 92 per cent.
Both US-based tech giants began giving out mobility indices at the beginning of 2020 in a bid to make the progress of mobility, and thus economic activity, coming back to normal open to the public.
Hypertrack is a San Francisco-based live location API startup for businesses that tracks deliveries, visits and rides. Kashyap Deorah, its CEO, said that while deliveries grew dramatically and stayed up, visits dipped at each lockdown and then slowly recovered back to same levels.
Rides, on the other hand, dipped dramatically and started recovering much slower. As they represent ride-sharing, employee transportation, and public transit, slower return is consistent with Apple Driving Index, he said.
“People started going back to essential places faster than they started driving as much. Google's index reflects coverage of place and discounts frequency of visit, thus recovering faster. Apple's index reflects overall movement, thus recovering slower,” Deorah told Business Standard.
Analysts have noted the consumption bump in Q2 and attributed most of it to pent up demand.
“It is possible that a portion of current consumption for consumer appliances and automobiles may reflect ‘pull-forward’ demand for convenience and safety reasons, respectively,” notes a Kotak Securities report.
However, if the well-off iPhone users going out and adding to the economy strongly is one case, the urban poor may not be contributing much, making the uptick in consumption temporary and insufficient to make up for early recovery.
“Covid-19 has affected household incomes especially for the urban poor, and that would affect broader consumption demand. Further, the cost-cutting initiatives of companies with a bulk of cost savings in the form of administrative expenses will have further affected incomes,” the Kotak report said.