Led by an improvement in mobility indices, in sync with the holiday season, the Nomura India Business Resumption Index (NIBRI) picked up to 94.5 for the week ending 3 January from an average of 91.7 December.
“Since its trough in April, economic normalisation has continued nearly uninterrupted, with NIBRI ending 2020 just around 5.5 percentage points below pre-pandemic activity levels,” Nomura said in its report ‘Economic normalisation continues apace’.
Finance secretary Ajay Bhushan Pandey in an interview told ET that transactions under the goods and services tax (GST) show that the economy is on a continued path of recovery even after a resurgence of Covid-19 forcing reimposition of movement restrictions and lockdowns in major parts of the country.
December GST collections at record Rs 1.15 lakh crore, up about 12% year-on-year, was the highest since April 2019 while the pace of contraction in exports slowed to 0.8% last month from 8.74% decline in November.
As per the Nomura tracker, power demand has also been strong, although the latest week corrected by 2.7% week-on-week after rising by 2.7% and 3.1% over the preceding two weeks. The labour participation rate eased to 40.3% in early January from 40.9% in December.
“This faster normalisation reflects a further moderation in new cases, despite the festive and winter season,” it said, adding that in tandem, activity data like auto sales, import growth, GST proceeds, manufacturing PMI and diesel sales improved.
Similarly, the health of the India’s manufacturing sector continued to strengthen with the IHS Markit India Manufacturing Purchasing Managers’ Index rising to 56.4 in December, a tick higher than November’s reading of 56.3, data released on Monday showed.
The Japanese financial services firm said that while weak global growth and a sudden volte-face on domestic pandemic control are key short term risks, over the medium term, easier financial conditions, stronger global demand and accelerated vaccinations could lead to an economic upcycle in 2021.