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India’s business activity falls to levels last seen in December


Business activity in India dipped further in the second week of April as states imposed stricter restrictions amid an intensifying second wave of Covid-19, according to brokerage firm Nomura.

The Nomura India Business Resumption Index (NIBRI) fell to 90.4 for the week ended April 11 from 93.7 a week earlier, the firm said in a report on Thursday. The index had last recorded such figures in December.

The key reason behind the dip was a deterioration in mobility indicators in response to the lockdowns and cautious consumer behaviour, the report said.

The Oxford Stringency Index for India rose to 69.9 as of April 13, from a recent low of 57.9 at the start of the month, reflecting the pan-India spread of the lockdown, but lower than 100 seen in April last year.

While Maharashtra imposed a strict curfew till May 1, Madhya Pradesh had imposed weekend lockdowns across major cities till further orders and on Wednesday, Rajasthan announced a night curfew from 6pm to 6am across the state.

India added a record daily high of over 2 lakh new cases over the past 24 hours, taking total infections in the country to about 14 million. India has been the world’s worst-hit country since April 2.

“Despite a much more severe second wave, a less stringent lockdown is consistent with the government’s strategy to focus on testing and vaccinations this time, although we do expect more states to impose restrictions in coming weeks,” said Nomura economists Sonal Varam and Aurodeep Nandi in the report.

The Google retail and recreation and workplace mobility indicators fell by 5.9 percentage points (pp) and 2.7pp, respectively, from the previous week, while the Apple driving index dropped by a sharp 8.4pp.

“The key concern is when lower mobility translates into lower outturns in other real economic growth indicators,” the report said.

Leading indicators which had held up until March witnessed signs of correction in April, Nomura said.

As of 13 April, railway passenger revenues dropped by ~25% from a month ago, suggesting individuals have cut back on their travel plans while railway freight revenues were down 7.7% over the same period, the report said.

Similarly, Goods and Services Tax E-way bills dropped 38% so far in April on an annual basis reflecting less intra-state and inter-state movement of goods.

On the other hand, power demand grew 9.9% compared to the levels from two years ago for the week ended April 11, as the labour participation rate fell to 40% from 41.2% a week ago coupled with a marginal increase in the unemployment rate, it said.

On the whole, Nomura expected a sequential loss of momentum in the April-June quarter but maintained its recently downgraded forecast of India’s FY22 growth at 12.6% against 13.5% earlier.

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