6 May 2020

E

CO

S

COPE

The Economy Observer

Understanding the Indian economy through districts

Orange zone most important from economic growth perspective

Since mid-Apr’20, when the government announced Lockdown 2.0 ending May 3, 2020, India’s landscape has been divided

into three zones – Red, Orange, and Green – based on the concentration of Coronavirus (COVID-19) cases. The list was

refreshed at the end of Apr’20, when the government decided to introduce Lockdown 3.0, which would extend up to May

17, 2020. The lockdown is being exercised more severely in the Red zone, while daily life is relatively the easiest in the

Green zone. In this note, we have compiled various macroeconomic statistics, such as population, bank credit, bank

deposits, and labor market statistics, and sorted them to understand the importance of these three zones from an economic

growth perspective. The key conclusions are listed below and related data/charts are appended on subsequent pages.



The number of districts per zone, as per the latest list, stood at 130 (Red), 284 (Orange), and 319 (Green), accounting for

18%, 39%, and 43%, respectively, of the 733 districts in the country

(Exhibit 1 on the following page).

The shares of the

Red and Green zones dropped from 23% and 49%, respectively, in mid-Apr’20, while the share of the Orange zone

increased. Still, the Green zone has the maximum number of districts (43%), but the Orange zone has witnessed the

highest increase (77).



The division of population (using Census 2011 data) in these three zones confirms the Orange zone accounts for 44% of

India’s population, followed by 32% in the Red zone, and the remaining 24% in the Green zone. The ratio was almost

equal in these zones in mid-Apr’20; however, almost a fourth of the population in the Green zone in mid-Apr’20 is now

classified under the Orange zone. The share of the Red zone has also fallen to 32% from 36% earlier

(Exhibit 2).



Details about Indian Scheduled Commercial Banks (SCBs) from the Reserve Bank of India (RBI) suggest that while the

Red zone houses 38% of banks’ reporting offices in the country, more than 70% of SCBs’ credit is owed to the borrowers

in the Red zone. The Orange zone accounts for another 21% of credit, while ~40% of reporting offices are in the Orange

zone. Just about 8% of credit is owed to the Green zone

(Exhibit 3).



Similarly, the Red zone accounts for 62% of SCBs deposits, with the Green zone contributing just ~12% to bank deposits.

The remaining 26% of deposits come from offices in the Orange zone

(Exhibit 4).



Unit-level details regarding India’s labor market from the Periodic Labor Force Survey (PLFS) 2017–18 confirms the

Orange zone accounts for 41% of India’s employed population, followed by 32% in the Red zone, and 27% in the Green

zone

(Exhibit 5).

Moreover, since the Red zone includes most of the metropolitan cities, the share of unemployed

population is marginally higher at 35%; however, the Orange zone leads at 40%

(Exhibit 6).



On an aggregate basis, more than half of India’s workforce is classified as ‘self-employed’ workers (partnership firms,

proprietorships, etc.), followed by almost a quarter as ‘casual workers’, and the remaining 23% as regular wage /

salaried workers

(Exhibit 7).

District-wise details of India’s workforce suggest that almost half of India’s regular wage /

salaried people belong to the Red zone, while the Green zone accounts for less than a fifth of regular workers. The

Orange zone has 42–44% each of ‘self-employed’ and ‘casual workers’

(Exhibit 8).



Similarly, while just ~43% of all workers work in the manufacturing and services sectors

(Exhibit 9),

the Red zone

accounts for 42–44% of the industrial and services workforce in the country. Interestingly, the Orange zone accounts for

~45% each of agricultural and construction workers, the vulnerable working sections, in the country

(Exhibit 10).



Finally, the summary table shows the relevance of the top 10 affected districts (in terms of confirmed cases of COVID-

19) up to the top 50 districts

(Exhibit 11).

The top 10 districts account for 5% of the population, 39% of SCBs’ credit, 29%

of deposits, 5% of total employment, and 12.5% of regular wage / salaried workers in the country. The shares go up to

16%, 53%, 47%, 17.5%, and 33%, respectively, when we look at the top 50 affected districts in the country.



Overall, the Orange zone has expanded substantially in the second half of Apr’20 and holds the maximum importance

from an economic activity perspective (on account of having a higher share of the population and workforce). The Red

zone, however, accounts for a disproportionately higher share from the perspective of banking businesses.

Nikhil Gupta – Research Analyst

(Nikhil.Gupta@MotilalOswal.com); +91 22 6129 1555

Yaswi Agarwal

– Research Analyst

(Yaswi.Agarwal@motilaloswal.com); +91 22 7193 4196

Investors are advised to refer through important disclosures made at the last page of the Research Report.

Motilal Oswal research is available on

www.motilaloswal.com/Institutional-Equities,

Bloomberg, Thomson Reuters, Factset and S&P Capital.

Exhibit 1:

Number of districts classified under Red, Orange, and Green zones in mid-April and April-end (%)

14-Apr-20

Red

170 (23%)

Green

356 (49%)

Orange

207 (28%)

Number of districts in

various zones (%)

30-Apr-20

Red

130 (18%)

Green

319 (43%)

Orange

284 (39%)

Source: Ministry of Health & Family Welfare, MOFSL

Exhibit 2:

Share of population in three different zones in mid-April and April-end

14th Apr'20

Share of population in

various zones (%)

Green

32%

Red

36%

Green

24%

Red

32%

30th Apr'20

Orange

32%

Orange

44%

Source: Ministry of Health & Family Welfare, 2011 Census, MOFSL

Exhibit 3:

Red zone accounts for >70% of all bank credit…

Bank credit*

Orange

21%

Green

8%

Exhibit 4:

…and just 12% of deposits come from Green zone

Bank deposits#

Green

12%

Orange

26%

Red

71%

Red

62%

Actual data for 3QFY20

Source: Reserve Bank of India (RBI), MOFSL

Exhibit 5:

Green zone accounts for 27% of workforce…

Employment

Exhibit 6:

…and just ~25% of all unemployed people

Unemployed people

Green zone

27%

Red zone

32%

Green zone

25%

Red zone

35%

Orange

zone

41%

Orange

zone

40%

6 May 2020

2

Exhibit 7:

Only ~ 23% of India’s workforce is classified as

‘regular wage/salaried’ workers…

Self-employed

13.1

32.0

14.0

33.0

Casual

14.3

Regular wages/salaried

15.6

33.5

17.6

29.9

52.2

Exhibit 8:

…almost half of which are engaged in the Red and

Green zones account for less than a fifth

Employment by status (%)

Red zone

Orange zone

27.8%

44.4%

27.7%

46.9%

Green zone

19.1%

34.1%

22.8

24.9

52.2

29.9%

42.1%

28.0%

Self-employed

28.9

54.8

52.8

56.9

51.0

Casual workers Regular wage/salaried

Exhibit 9:

Industry and services sectors account for ~44% of

India’s workforce…

Agriculture

22.4

4.3

10.7

Manufacturing

23.4

5.6

11.7

25.3

9.6

11.0

53.2

Construction

26.8

10.6

12.6

48.9

Services

Exhibit 10:

…of which ~43% workers are employed in the red

zone

Employment by sector (%)

Red zone

Orange zone

16.8%

39.0%

28.2%

44.8%

Green zone

22.4%

36.0%

31.1

11.7

12.1

32.7%

43.8%

61.7

58.5

44.1

23.4%

44.2%

Industry

27.0%

Construction

41.6%

Services

1999-00

2004-05

2009-10

2011-12

2017-18

Agriculture

Don’t add up to 100; the difference is engaged in ‘Mining &

Quarrying’ & ‘Utilities’ sectors

Source: Periodic Labor Force Survey (PLFS) 2017-18, MOFSL

Exhibit 11:

Summary of key macroeconomic variables in top 50 districts by number of confirmed COVID cases

Share in (% of total)

Confirmed Cases*

Population#

Bank offices^

Bank deposits^

Bank credit^

Employment~

Self-employed

Casual workers

Regular wage/salaried

Top 10 districts

52.3

4.7

9.8

29.1

38.6

5.1

3.4

1.9

12.5

Top 20 districts

63.8

7.5

12.9

33.4

43.9

9.2

6.8

4.9

19.5

Top 30 districts

69.7

11.1

16.4

37.4

45.9

13.1

10.1

8.7

24.9

14.8

Top 40 districts

74.0

13.3

19.0

40.1

48.1

15.3

11.8

10.6

28.3

17.6

Top 50 districts

77.0

15.6

22.5

46.5

53.4

17.5

13.4

12.0

32.8

Unemployed people~

6.1

10.7

*

https://howindialives.com/gram/index.php

As of May 4, 2020, 1000 hours

^ Data as of end-Dec’19 (3QFY20)

20.7

# Based on 2011 census data

~ 2017-18 data

Source: MOHFW, 2011 Census, RBI, PLFS, MOFSL

6 May 2020

3

NOTES

6 May 2020

4

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