NEW DELHI: Business activity in India has declined as the second wave of the pandemic, which is spreading beyond Maharashtra, has started to impact mobility levels, according to Nomura. The Nomura India Business Resumption Index (NIBRI) dipped to 95.1 for the week ended March 21, from 95.4 in the prior week, the Japanese brokerage said on Monday.
“The pandemic’s second wave is now spreading to states outside Maharashtra and is starting to impact mobility. This second wave is likely to result in a short-term growth bump to what is otherwise an uptrend,” it said. As of mid-March, Google workplace and retail and recreation mobility fell by 3.7 percentage points on a week-on-week basis and 0.3 percentage points, respectively, while the more updated Apple driving index fell by 2.6 percentage points.
However, power demand improved by 2.6 per cent week-on-week after a 0.6 per cent decline the prior week, while the labour participation rate inched up to 40.6 per cent from 39.5 per cent. The knock-on effect of the second wave on mobility suggests a likely sequential dip in contact-based services and a near-term delay of normalisation.
However, the brokerage said, it expects the impact to be “more transitory and muted” (than in Q2 2020), as factory operations remain uninterrupted; consumers and businesses have adapted to the new normal with the latter overhauling their supply and sales chains to become more resilient. Besides, medium-term tailwinds like vaccinations, global growth, and continued easy financial conditions will support real GDP growth of 13.5 per cent in FY22, up from a contraction of 7.4 per cent in FY21, Nomura said.