India relaxes lockdown curbs, but concerns persist

India has listed economic activities that could be permitted to resume from next week as it contends with the fallout from the Covid-19 pandemic. But coal-consuming industries say the move might not yield the desired results.

The country will allow certain activities to resume from 20 April, the ministry of home affairs said today, offering hope that industries such as sponge iron and cement manufacturers can return to work, having been closed on 25 March. The government yesterday extended the lockdown until 3 May.

The relaxations could result in a staggered reopening. But the weak demand outlook and strict safety guidelines could weigh on efforts to support the economy.

Operations at ports, coal mining and movements of essential goods, such as coal, have been allowed to continue. But various challenges — not least a shortage of workers — could continue to disrupt operations.

Production units that require continuous process and their supply chain will be permitted to operate, the ministry said. Coal-consuming brick kilns will be allowed to resume operations in rural areas, as will certain construction activities. Strict social distancing must be observed.

But returning industries might operate at only a fraction of capacity, and weak demand might force them to close again.

Operations could resume at some sponge iron mills, but we "cannot say for how long", according to Sponge Iron Manufacturers Association president Rahul Mittal. "Sponge iron by nature is semi-perishable, unless there is continuous dispatch."

Those in the cement industry, a key consumer of coal and petroleum coke, are also concerned about demand.

Although the government has advised that some construction activities can restart, labourers would need to be available, an executive from a cement firm said. He added that he believes cement dealers are still not allowed to reopen retail outlets.

Indian cement producers have lost more than three weeks of sales and production since the lockdown began and are estimated to be sitting on large stocks.

An uptick in economic activity should support electricity generation and coal burn. India's coal-fired generation in March dropped by about 11TWh on the year to 77.19TWh, according to data from the Central Electricity Authority.

Indian receipts of seaborne thermal coal fell by 1.3mn t on the year to 14.72mn t in March, data from shipbroker Interocean show.

The lockdown relaxations follow calls by industry bodies for support and moves towards an "orderly and safe restart" of the economy. The IMF forecasts that India's economy will grow by just 1.9pc in the fiscal year to 31 March 2021, down from an estimated 4.2pc in 2019-20. The World Bank sees India's economy growing by 1.5-2.8pc in 2020-21.

By Saurabh Chaturvedi

source: Argus Media