Japanese securities and investment firm Nomura said that economic activity is on the verge of normality after being severely hit by the coronavirus pandemic. The firm said that India GDP will grow at 13.5 per cent in FY22.
Nomura’s estimates are higher than the growth rate estimated by the Reserve Bank of India. The RBI expects GDP to jump by 10.5 per cent in FY22, after contracting by 7.7 per cent in FY21. The Nomura said that it expects real GDP to contract by 6.7 per cent in FY21 and grow by 13.5 per cent in FY22.
“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.
Since April 2020, NIBRI remained on an uptrend through 2020 that has continued into 2021, rising from 86.5 in October-December 2020 to 94.7 in January-March 2021. The latest data suggest that economic activity is returning close to pre-covid levels.
The Index of Industrial Production (IIP) now stands at par with the pre-Covid level seen in February 2020. Nomura’s predictions are in line with India’s data on industrial production, which registered a modest growth of 1% on an annualized basis in December 2020 compared to a contraction of 2.1% in November.
Recovery was led by manufacturing, consumer goods along with infrastructure and construction goods. “With the lockdown restrictions being progressively brought down to minimal levels, mobility indicators are now only 10-15% below pre-Covid levels,” ratings and research agency Acuite said. “The economic policy out turn reinforced in the Union Budget FY22 amidst an accommodative monetary and liquidity backdrop that RBI remains committed to, continue to remain supportive of economic recovery.”