Business activity surpasses pre-pandemic levels: Nomura report

It seems the worst is behind us as the business activity in India has not just recovered but breached the pre-pandemic levels as well. For the week ended August 15, the Nomura India Business Resumption Index, or NIBRI, breached the 100-mark for the first time since the time the pandemic broke out. The NIBRI stood at 101.2 for the week ended August 15. For the week that ended on August 8, the index was at 99.6.

Quick recovery after 2nd wave

Nomura economists Sonal Varma and Aurodeep Nandi said that the recovery from the second wave has been very rapid. The NIBRI took almost 10 months to reach the 100-mark after the first wave, but after the second wave, it reached that mark in under three months.

They added that this supports their positive growth outlook. In addition to this, the economists said that the sustained rise of the NIBRI during July-August shows the possibility of a strong sequential rebound in Q3FY22.

As per Nomura, India’s Gross Domestic Product (GDP) in the Q1FY22 (April-June) is expected to sequentially contract by 4.3%, but expand by 29.4% from a year ago owing to a lower base.

Nomura’s estimate of expansion is higher than that of Bloomberg, which stands at 19.4% and that of the Reserve Bank of India which anticipates growth of 21.4%. The GDP data for the April-June quarter will be out on August 31.

Nomura’s report suggested that India’s demand for power rose 5.7% on a week-on-week basis, while the labour participation rate fell from 41.5% to 40.4%.

Retail inflation fell to 5.59% in July from 6.26% in the previous month and the Index of Industrial Production (IIP) grew 13.6% year-on-year.

It also said that in the Q1FY22 industrial production shrunk by 0.1% on a sequential basis. In the Q1FY21, it had contracted by 26.3% during the first wave thus corroborating the fact that the second wave was much less devastating for the economy compared to its predecessor.