Night Lights Tell The Story Of Dimming Economic Activity Across India

For 21 days, between March 24 and April 14, India has been locked down. Most factories are shut, store shutters are down, roads are empty.

Priam Pillai, scientist and associate Professor at Pillai College of Engineering helps explain the data.

The night lights data is not just the effect of the complete shutdown, things were declining much before that, Pillai said. Many cities started closing schools and colleges starting from March 10-12 even before the complete shutdown, he said.

Any such reduction in night lights is usually attributed to fewer vehicles plying on the roads and fewer factories working. Hence, it is considered an indicator of economic activity, he explained. That is not to say that one can draw a 1: 1 relation between GDP and night lights, Pillai added.

The Reserve Bank of India, in a paper released in June 2019, said that “night lights are a reasonably robust indicator of economic activity in India as it tracks both trend growth and seasonal variations in GDP reasonably well”. The RBI study found the relationship of night lights with quarterly GDP growth is statistically significant even after controlling for seasonality.

Night light intensity depends on various exogenous and endogenous factors such as the level of electricity generation, the sectoral composition of output, and the existing level of development, the paper added. One reason is it important to track in a country like India is because it captures informal sector activity, which indicators like GDP may not.

But the data doesn’t always give a clean read.

Factors like a change in cloud cover and pollution can also impact night lights, Pillai said. Giving an instance, Pillai said that some districts in China, even amidst the lockdown, saw night light intensity rise because pollution had fallen sharply.