Economic activity is on the “verge of normality” after getting severely hit by COVID-19 and Indian GDP will grow at 13.5 per cent in FY22, a Japanese brokerage said on Monday.
The Nomura India Business Resumption Index (NIBRI) picked up to 98.1 (provisionally) for the week ending February 14, from 95.9 in the preceding week, Nomura said.
The economic impact of the pandemic is set to lead the country’s GDP to contract by 7.7 per cent in FY21, and the RBI expects the GDP to jump by 10.5 per cent in FY22.
The brokerage said it expects the real GDP to contract by 6.7 per cent in FY21, followed by a growth of 13.5 per cent in FY22.
For the week to February 14, mobility indicators continue to pick up, it said.
While power demand fell by 0.1 per cent week-on-week, this may be likely due to a payback from the stellar 9.6 per cent rise during the preceding week, it said, adding that labour participation rate inched down to 40.5 per cent from 40.9 per cent in the previous week.
The brokerage said its proprietary index has been on an uptrend since hitting its trough during the strict lockdown in April last year.
“This supports our view that sequential momentum remains positive and that year-on-year GDP growth likely moved into positive territory, at 1.5 per cent in Q4 2020 (from -7.5 per cent in Q3) and 2.1 per cent in Q1 2021,” it said.
The continued recovery in the index is strongly predicated on containment of the pandemic, the brokerage said, adding it is upbeat on growth prospects due to the confluence of fiscal activism, the lagged effects of easy financial conditions, base effects and faster global growth.