India's pace of business activity resumption drops to June 2020 levels: Nomura

The pace of India’s business activity resumption dropped drastically to levels last seen in June after having fully recovered in February, according to Japanese brokerage Nomura.

The Nomura India Business Resumption Index (NIBRI), dipped to 64.5 for the week ended May 11, down from 69.7 a week earlier, the firm said in a note on Tuesday.

The last time the weekly tracker of high frequency indicators such as mobility indices, power demand and labour participation rate was at such low levels was in mid-June as the country had just begun emerging from a nation-wide lockdown.


While the Centre has said it will not impose a blanket lockdown, a majority of the country was under some form of restriction on movement as lockdowns and other restrictions have been imposed across 28 states and union territories, according to reports.

The second wave continued to surge as India recorded 329,942 fresh cases of Covid-19 and 3,876 deaths over the last 24 hours, official data showed.

The fall in the NIBRI continued to be driven by declining mobility as Google’s workplace and retail and recreation mobility indices fell by 10 percentage points each over the week while the Apple driving index shrank 8pp, Nomura said.

Power demand contracted 4.1% on a weekly basis even as the labour participation rate rose 41.3% over 38.9% a week before.

Indicating similar trends, the State Bank of India business activity index, which has been falling steeply since April, touched lows last seen in August at 71.1, according to data from SBI Research as of Friday.

“The sharp drop in NIBRI suggests that the rolling state-wide lockdowns are hurting sequential growth,” said Nomura economists Sonal Varma and Aurodeep Nandi, in the note, but cautioned that sharply declining mobility was exaggerating the hit to economic activity.

While Nomura maintained its recent downgrade of India’s FY22 growth forecast to 10.8% from 12.6%, SBI Research said it was apprehensive of double-digit growth this fiscal after revising its projections to 10.4% in April.