Business resumption is faltering in India and a flattening mobility curve amid a rising pandemic curve is a key risk, according to a research by foreign brokerage, Nomura.
Nomura Indian Business Resumption Index (NIBRI), a weekly tracker of the pace at which economic activity is normalising – moderated to 69.2 for the week ending July 5 from 70.5 on June 28.
Activity has recovered from the lows of around 45 at end April and rose sharply from May until mid-June, but the pace of increase has slowed since.
This is the first time the index has fallen in the post-lockdown phase (since May) on a week-on-week basis.
Nomura said the slowdown was primarily driven by a continued flattening of Google's mobility indices along with a downtick in labour participation and power demand.
The CMIE's weekly data suggest that, over the past 15 days, the overall unemployment rate inched up by 0.4 percentage points to 8.9 per cent for the week ending July 5 as the participation rate fell by 1.5 pp to 40.4 per cent.
Power demand contracted by 5.8 per cent week-on-week (seasonally adjusted) for the week ending July 5 after growth of 4.1 per cent in the prior week.
"Overall, the NIBRI suggests that, while business resumption continued in June, activity remains about 30pp below pre-pandemic levels. So the normalisation is still far from complete, and activity appears to be plateauing at a lower level", Nomura said.