Is Indian economy in recovery mode?

Indicating a faster-than-expected recovery, remittances from migrant labourers and the number of first-time EPFO registrations have crossed the pre-lockdown levels in September, according to a report.

Another silver lining is the massive 60 per cent increase in the number of Jan Dhan accounts to over 41 crore and the balances in them, which also indicate the fall in crimes during the lockdown months, SBI Research said in a report on Tuesday.

After a significant reduction in remittances due to the lockdown in April, it improved in June and July, and the numbers in September have crossed the pre-pandemic level in February.

This seems migrant labourers are coming back in large numbers to the workplace for livelihood.

However, the same declined in August primarily due to heavy rains that stopped work in many areas, according to SBI Research.

According to SBI Research, remittances were 112 in February (where the normal indexed to 100) but it slipped to 85 in April (the worst lockdown month), and gradually improved to 94 in May and 105 in Jun; but marginally slipped to 103 in July and plunged to 97 in August due to the heavy rains and again jumped to 115 in September.

Similarly, according to the payroll data from the Employees' Provident Fund Organisation (EPFO), during April-August 2020, 25 lakh new EPF subscribers have joined, of which 12.4 lakh were first-time payroll entrants.

The point of concern though is that the degree of formalisation has dropped significantly to six per cent in 2020-21 from an average of 11 per cent in earlier years.

During 2019-20, 110.4 lakh new EPF subscribers were added compared to 139.4 lakh in 2018-19, indicating a loss of 29 lakh subscribers.

As of October 14, total number of Jan Dhan accounts stood at 41.05 crore with a total balance of Rs 1.31 lakh crore.

Since the beginning of April, around 3 crore no-frills accounts were opened, with a total rise in deposits of Rs 11,060 crore in these accounts.

The coronavirus pandemic has led to a 60 per cent increase in the opening of new Jan Dhan accounts.

The average balance in these accounts increased to Rs 3,400 in April and declined thereafter to Rs 3,168 in September and now marginally increased to Rs 3,185 in October.

The government has paid Rs 500 to woman Jan Dhan accounts a month till September.

During the same period in 2019, only 1.9 crore were added with increase in deposits of only Rs 7,857 crore. Thus, the pandemic has led to a 60 per cent rise in the opening of Jan Dhan accounts.

Empirical and NCRB data show that wherever there was increased usage of Jan Dhan accounts, there has been less number of crime/theft.

The report did not offer an absolute number, as NCRB data is available only up to end 2019.

There is evidence of Jan Dhan accounts having some impact on crimes. UP, Maharashtra and Haryana may have witnessed a lagged impact of the usage of these accounts and thus a positive impact on theft, said the report.

It added that Bengal, Tamil Nadu and even Kerala have seen a continuous impact since inception, and Gujarat and Karnataka have also seen a favourable impact.