The pace of economic recovery has further improved in August and the first week of September over July, according to a Nomura note on Monday.
A strong rise in Google’s retail and recreation index indicated more consumers were stepping out for purchases, it said.
However, the increasing rate of daily Covid cases suggested that lockdown fatigue has set in, it added.
The Nomura India Business Resumption Index (NIBRI), the Japanese brokerage‘s weekly tracker of the pace of normalisation of economic activity, touched 77.4 for the week ending on September 6.
The reading was an improvement from the 75.7 recorded at the end of August. The increasing pace of normalisation was sustained through August, after it plateaued around the 70 mark in July, Nomura said.
Among the key components of this improvement, the labour participation rate rose to 41.2% during the first week of this month compared to 39.5% in the previous week. Adding to this, the unemployment rate fell to 7.3% from 8.1% of the earlier week.
Nomura cautioned of the risk to a sustained recovery from the persistent rise of daily virus cases. “However, as the number of virus cases continues to rise, both within and outside major economic centres, the durability of the recovery remains in doubt.”
The brokerage downgraded its estimate of growth for the economy to -9% for 2020 (CY) after the ‘disappointing’ results of the April-June quarter, it said.
Official data released on August 31 showed India’s first quarter performance to be one of the worst in the world at -23.9%. Nomura projected a deeper contraction for FY21 at -10.8% from -6.1% earlier.
While State Bank of India Research revised its FY21 estimate to -10.9%, down from -6.8% earlier, rating firm India Rating and Research will release its updated report on Tuesday, which is likely to show a downward revision.
The finance ministry said the sharp decline was in line with the level of stringency of India’s lockdown, in its monthly economic review for August.