India's business activity picks up sharply in June

The calibrated reopening of the Indian economy by states as the number of fresh Covid-19 cases subside increased mobility and aided in a fast-paced increase in an index of business resumption last week, a Japanese brokerage said on Monday.

The Nomura India Business Resumption Index rebounded to 76 for the week ended 13 June, up from the preceding week's 67.9, reports Rediff citing a note from the brokerage.

The pre-pandemic value of the index is set at 100. The index had risen consistently after the India's nation-wide lockdown of 2020, to almost to the pre-pandemic level in March but the second wave of the pandemic had led to multiple weeks of decline in the index.

"Much of this (increase in week to 13 June) can be explained by the strong revival in mobility indicators, as states have begun a calibrated reopening, with Google mobility indices, the Apple Driving Index, and daily railway passenger revenues all rising," the brokerage said.

The recovery in the non-mobility side has been "more gradual", it said, adding that daily railway freight revenues have been rising slowly, GST E-way bills in the first week of June are at higher levels than during the first week of both April and May but lower than the January and February average.

Similarly, power demand continues to recover, picking up by 4.9% week-on-week on a seasonally adjusted basis for the week ending 13 June, after a 7.6% gain the previous week.

India's labour participation rate inched up to 39.8% from 39.2% the previous week, with the unemployment rate dropping to a still-elevated 8.7%.

From a growth perspective, it said the rebound in activity will aid a sequential increase in the economy's expansion rate but it will remain weak compared to pre-second wave levels.

A key downside risk being monitoring is a potential flare-up of cases as lockdowns are progressively eased, it added.