The Nomura India Business Resumption Index (NIBRI) fell to 64.5 for the week ended May 9 from 69.7 the prior week (i.e., 35.5pp below pre-pandemic levels). The index is now at levels last seen in mid-June, after having fully recovered in February.
· The fall continues to be driven by a sharp fall in mobility. Google’s workplace and retail & recreation mobility indices fell by 10pp from the prior week, while the Apple driving index fell by 8pp. Power demand also fell by 4.1 per cent w-o-w (week-on-week), although the labour participation rate inched higher to 41.3 per cent vs 38.9 per cent last week. "The sharp drop in NIBRI suggests that the rolling state-wide lockdowns are hurting sequential growth. We would, however, caution that the drop in mobility exaggerates the hit to economic activity. International experiences suggest the correlation between mobility and GDP growth is much weaker during the second wave, due to more targetted restrictions and more pandemic-adept consumers and businesses," Nomura said.
“We recently lowered our GDP growth forecast for 2021 to 9.8 per cent y-o-y from 11.5 per cent (FY22: 10.8% from 12.6%), reflecting a larger lockdown-led loss of sequential momentum in Q2. We expect a localised hit in Q2 and believe that medium-term tailwinds (vaccine pivot, global recovery, easy financial conditions) remain intact,” it added.