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.
 Motilal Oswal Financial Services
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
 Motilal Oswal Financial Services
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
 Motilal Oswal Financial Services
NOTES
6 May 2020
4
 Motilal Oswal Financial Services
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6 May 2020
6