India's economy is slowly recovering: Nomura

13 Aug '20

2 min read

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The pace of India’s economic recovery showed improvement recently due to divergent trends in indicators like mobility and employment, according to a note from Japanese company Nomura. After being stuck around the 70 mark for the past three weeks, the Nomura India Business Resumption Index (NIBRI) increased to 71.8 in the week ending August 9.

NIBRI is a weekly tracker of the pace at which economic activity normalises.

According to the note, while Google’s retail and recreation mobility index and Apple’s driving index picked up incrementally, Google’s workplace mobility worsened.

Similarly, the labour participation rate inched up to 40.6 per cent compared to 40.5% last week but the unemployment rate rose to 8.7 per cent from 7.2 per cent the week earlier, it said. Power demand also contracted by about 0.8 per cent, which was an improvement over minus 2 per cent recorded in the previous week.

However, “Overall, the NIBRI remains largely stagnant at nearly ~30pp (percentage points) below pre-pandemic levels,” Nomura said.

“However, a second wave of COVID-19 cases, combined with a ‘rolling wave’ in traditionally safer states (in the south and the east), increase risks of protracted quasi-lockdown measures and tempering of sequential improvement in activity once the post-lockdown momentum ebbs,” the note said.

After hitting a lockdown low of about 45 at the end of April, the NIBRI made a sharp recovery by mid-June to 70.5. However, the recovery lost its momentum as multiple states imposed fresh lockdowns in July, according to reports in Indian business dailies.

Nomura estimated a 5.2 per cent contraction for India’s growth during the current fiscal.

Fibre2Fashion News Desk (DS)

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