MUMBAI: Business resumption surged to a new high despite the fears of the newly discovered Omicron variant, and inflationary pressures are building up, a Japanese brokerage said on Monday.
The Nomura India Business Resumption Index, a weekly tracker which compares activity with the pre-COVID week, inched up to 114.5 for the seven days ended Sunday, as against 114 in the previous reporting week.
"Despite the uncertainty triggered by Omicron, high frequency data suggest that the economy remains on a recovery path and inflationary pressures are building up," it said.
The brokerage said border reopening will likely be slow, as the discovery of the Omicron variant globally has prompted the Indian government to review and tighten its international travel guidelines, and several states are on alert.
However, the economy's reliance on tourism is "relatively small" as it accounted for only 1.1 per cent of GDP in 2019.
Continued normalisation of domestic contact-intensive services is contingent on infection cases remaining low, as only around 32 per cent of the population are fully vaccinated, it added.
For the reporting week, Google workplace and retail and recreation mobility rose by 3.6 percentage point (pp) and 1.6 pp, respectively, while the Apple driving index eased marginally by 0.5pp.
The labour participation rate improved to 40.5 per cent from 39.8 per cent in the prior week, while power demand recovered by 1.2 per cent over the previous week, it said.