India's economy is slowly recovering, shows Nomura India Business Resumption Index

The pace of economic recovery improved during the previous week on account of divergent trends in indicators like mobility and employment, according to a Nomura note on Monday.

The Nomura India Business Resumption Index (NIBRI) increased to 71.8 in the week ending August 9, after being stuck around the 70 mark for the past three weeks.

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, the note said.

Similarly, the labour participation rate inched up to 40.6% compared to 40.5% last week but the unemployment rate rose to 8.7% from 7.2% the week earlier, it said.

Power demand also contracted by about 0.8%, which was an improvement for -2% recorded in the previous week.

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

The data available for July so far suggested an uneven recovery which largely reflected pent up demand, it said, adding rural demand performed better comparatively.

“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.

The weekly tracker has shown a rather bumpy recovery path as against the expected smooth upward curve. 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. This was reflected in the NIBRI dropping to 66.8 in the week ending July 12 before stagnating at the 70 mark.

Nomura estimated a 5.2% contraction for India’s growth during the ongoing fiscal.