Using High Frequency Electricity Data to look at Economic Activity Impact of Coronavirus Lockdown

Following a national address by PM Narendra Modi on 24th March 2020, a nationwide lockdown to contain the spread of the coronavirus was initiated. This lockdown involved halting of all economic activities barring those that were need to maintain essential supplies. Due to earlier confusion as to the details, even essential supplies took a hit. People were confined to their residences, and movement were restricted. All major service organizations shifted to a work from home mode of carrying out business.

Following the first round of lockdown, between 24th March to 14th April, a second continuation was declared starting 15th April to last till 3rd May with conditional relaxations in some regions where spread had till then been contained. The last round of lockdowns with further easing were continued from 3rd May till 17th May first and then later from 17th to 31st May by the National Disaster Management Authority. Following the lapsing of lockdown on 31st May, an Unlock 1.0 phase was declared starting 1st June with phase wise opening of all major industrial and retail activity.

Our data of daily consumption of electricity comes from the National Load Despatch Centre of the Power System Operation Corporation Limited which optimum scheduling and despatch of electricity through the national grid. They release daily, weekly and monthly reports of power consumed, energy supplied being reported in million units of energy supplied to each state grid. Using this data, we can then track the change in consumption of electricity nationwide which becomes a proxy for economic activity following from Cicala (2020) and Benedikt and Radulescu (2020). The fall in consumption of electricity can be a predictor of total output contraction in the period and the recovery in consumption can be a harbinger of the expected speed of recovery.

We remove seasonal components from the data that can distort our results, these seasonal aspects come from whether a time period is the harvesting period or are summer months which can impact electricity consumption. [i]

Overview of Power Consumption in India

India has been seeing a steady increase in Electricity consumed with a trend year on year growth rate of 3.5% with significant heterogeneity amongst state wise consumption growth rates. Bihar leads the electricity consumption growth rate with growth rate around 13% with North East states following close with rates ranging from 7% to about 10%. Amongst larger states, Telangana, Madhya Pradesh and Uttar Pradesh show higher rates of growth.

Figure 1 represents the per capita[ii] mean annual power consumption.

Figure 2 presents the overall trendline for India till 2019.

Impact of Coronavirus Lockdown

To estimate the impact of the lockdown we use data from financial year 2014 onwards to estimate the expected consumption during the lockdown period, accounting for the seasonality and trend. Using those trends and seasonality, we find that beginning the lockdown period there was a significant deviation between the actual and the predicted consumption of electricity. The actual consumption of electricity nationwide was consistently lower than the predicted one across all phases of the lockdown. This fall from the predicted value was the most for the 1st period of lockdown with an average fall of 12.25%. This shortfall in electricity consumption decreased across the phases with the 2nd period of lockdown witnessing only an 8% decrease while the further phases had no statistically significant difference from similar periods in previous years.

Table 1

Phase of Lockdown Change in Consumption compared to same period in previous years
Phase 1 (25th March – 14th April) -12.25%
Phase 2 (15th April – 3rd May) -8.07%
Phase 3 (4th May- 17th May) No statistically significant difference
Phase 4 (17th May – 31st May) No statistically significant difference
Unlock 1.0 (1st June onwards) No statistically significant difference

Further, as we can see from Figure 3 since the beginning of lockdown 3.0, we have seen an increase in actual consumption of electricity which is consistent with the increasing economic activity as restrictions were eased across rounds of lockdown.

Figure 3 The Actual and Predicted Consumption across the various phases of Lockdown

We also note an increase in consumption of electricity across the phases with phase 2 seeing a 5.4% increase in consumption. Table 2 provides the average increase in electricity consumption over the previous phase of lockdown. We see that each round sees an increase over the previous round till we come to Unlock 1.0 which saw no significant difference as compared to phase 4 (at 5% level).

Table 2

Phase of Lockdown Change in Consumption compared to the previous period of lockdown
Phase 2 (15th April – 3rd May) 5.38%
Phase 3 (4th May- 17th May) 8.60%
Phase 4 (17th May – 31st May) 10.55%
Unlock 1.0 (1st June onwards) No statistically significant difference

We thus see the data showing up the kind of trends we expect to see. The national level statistics do hide considerable heterogeneity in state level consumption of electricity with certain states exhibiting above average decreases while some states surprisingly see an increase in consumption. For more on this, stay tuned for the 2nd part in this series.

References

  • Cicala, Steve. Early Economic Impacts of COVID-19 in Europe: A View from the Grid. Tech. rep. Online, last accessed: May 6, 2020. University of Chicago, 2020.
  • Janzen, Benedikt, and Doina Radulescu. “Electricity Use as a Real Time Indicator of the Economic Burden of the COVID-19-Related Lockdown: Evidence from Switzerland.” (2020).

[i] Our analysis excludes Andaman and Nicobar Islands and Lakshadweep islands as they are not connected to the National Grid

[ii] Per 2011 population census

About the Author:

Ashutosh Dwivedi is a Research Associate at SRITNE.

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