PremiumMUMBAI: There seems to be a divergence among businesses on expected timelines for eventual normalisation, as southern India and select states in the east could see a lag in recovery over the next few weeks, analysts said.
“Overall, activity levels in April to June have been less subdued year-on-year as can be seen from much lower declines in mobility data - retail/grocery sales declined by 72%/23% in Q1 FY21 vs. 50%/8% in Q1FY22 (year-to-date) now, almost 30% better," JM Financial said in a report on Friday.
The start of the monsoon has been strong, Kharif sowing is progressing well, and consequent farm income support is likely to sustain agricultural investments, it said.
Despite partial impact on non-farm income and higher medical expenses in Q1FY22, government support in the form of free food and minimum support price-based procurement and sharp deceleration in covid-19 cases are likely to boost demand momentum after April-June, with a gradual pick-up in discretionary spending, it added.
“The adverse impact on the economy in Q1 FY22 was significantly lower as compared to the last year, which is also reflected in a milder surge in unemployment rates to 11-15% as against 25% in Q1 FY21. A reasonable continuity in construction activities (70-80% levels) has a played a key role in maintaining economic buoyancy, while overall normalization of the economy would need the resumption of schools, colleges and workplaces," the report said.
That said, the pace of vaccination, it said, remains a key monitorable and with 18% population coverage currently--13% in east India--, it needs to be accelerated.
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