Business picking up, services too catching up, says Nomura

The Nomura India Business Resumption Index (NIBRI) rose to another record high of 126.4 for the week ended March 20 from 122.8 in the previous week. Pick-up in business activity was broad-based with the domestic reopening aiding a fast catch-up in services, Nomura said in a note on Monday.

The NIBRI was about 26.4 percentage points above its pre-pandemic levels. The financial services firm said it was too early to tell, but the "growth impact of the ongoing war appears to be limited thus far".

"Domestic reopening is aiding a fast catch-up in services while consumers have been shielded from rising global crude oil prices, with domestic retail pump prices frozen since early November," it said.


Google workplace mobility rose by 2.4pp, retail & recreation by 3.1pp and the Apple driving index by 11.7pp from the previous week, with all mobility indicators above their pre-pandemic levels. The labour participation rate stood at 39.3% on March 20 from 39.0% in the prior week, while power demand rose by 1.8% week-on-week (sa) vs 2.1%. The NIBRI considers the Google mobility indices, Apple driving index, power demand and the labour force participation rate. Mobility indices are based on a seven-day moving average. The pre-pandemic February 23, 2020 level is indexed at 100 and considered the base for comparisons. The index is now 15.8 percentage points (PP) above the pre-pandemic level.

Inflation concerns
Nomura flagged concerns on inflationary impact of the Ukraine-Russia conflict, saying it expected it to dominate GDP growth drag.

"A broad-based surge in food-energy costs and a narrowing output gap will likely keep Consumer Price Index-based inflation above the RBI's target (2-6%) in 2022," it said. Nomura's projection is 6.3%. The note cautioned that if the domestic fuel prices remain untouched, then a higher fiscal burden (on- or off-budget) and a higher import bill are also likely (due to limited demand rationing).