In Charts: Early Data Suggests A Good Beginning For The Indian Economy In 2021

Economic activity in India had held up well after the festive boost, kicking off 2021 at a pace comparable with the last few months.

Positive pandemic-related developments — both, on cases and vaccination — are helping clear the decks for a faster pace of economic normalisation, said a research note by Nomura dated Jan. 18, 2020. Aggregate demand is fast catching up with aggregate supply and GDP growth is likely to return to positive territory in the October-December period, growing by 1.5% on an annual basis, according to estimates by Sonal Varma & Aurodeep Nandi, India economists at Nomura.

The Nomura India Business Resumption Index inched up to 93.4 for the week ending 17 January from 93.2 the previous week, now standing just 6.6 percentage points below pre-pandemic levels, said the note.

According to Pranjul Bhandari, chief India economist at HSBC, economic activity has rebounded strongly to 94% of pre-pandemic levels. The demand for goods is back to pre-pandemic levels even as the demand for services remains 30% below pre-pandemic levels according to the note.

The Indian economy continues to hold up better than expected, with pockets where demand is sustaining and ramping up, said Sameer Narang, chief economist at Bank of Baroda.

Google Mobility

The Google Mobility Tracker, which looks at movement across different categories, saw a pick-up in mobility for places of work, accompanied by a decline in the mobility trends for residential places.

Mobility trends for workplaces were lower by 19% between Dec. 1- Jan. 12 compared to the pre-pandemic baseline. This compares to activity 36% below baseline between Nov. 13- Dec. 25. Mobility trends for places of retail, recreation and supermarkets remained close to levels seen in the past few months.

Foreign Trade

Preliminary merchandise data for the first half of January 2021 continued to show signs of recovery after a return to growth in December.

Despite the pandemic resurgence globally, trade data for January 1- 14, 2021, suggests a sharp pick up in exports, according to Nomura. While exports rose by 10.9% for this period on an annual basis from 0.1% for the full month of December, core imports rose 13.1% from 8.1% last year, Nomura said.

Exports rose by 0.14% in December 2020 compared to a contraction of 8.74% in November. Non-petroleum and non-gems and jewellery exports grew by 5.5% compared to a contraction of 0.4% in the same duration. Imports increased by 7.56% compared to a contraction of 13.32% in the same duration. Non-oil and non-gold imports grew by 7.99% compared to a contraction of 1.67% the previous month.

Unemployment Rate

Unemployment rate showed early signs of a fall as of Jan. 17, 2021. It eased to 4.66% for the week ended Jan.17, 2021, compared to 7.38% for the week ended Jan.10, 2021, according to data by the Centre for Monitoring the Indian Economy.

The unemployment rate has remained volatile and rose to 9.06% in December — the highest since June 2020.

E-way Bills

E-way bill collections up to Jan. 17, 2021, were at 56.88% of the collections for the same month in 2020.

In December, e-way bill collections rose to the highest since April 2018 — when data is available from. E-way bill collections rose by 15.9% to 6.42 crore last month.

Vaccine Pivot

India has kick-started it’s vaccination drive, with a total of 2.24 lakh beneficiaries vaccinated as per a provisional report by the Ministry of Health and Family Welfare dated Jan.17, 2021.

“Lift to economic activity hinges on efficacy, deployment and timeliness of the vaccination program”, said Radhika Rao, an economist at DBS Bank. The vaccine’s roll-out is expected to drive recovery in contact intensive services. “We expect a rotation from goods demand to services demand, led by the roll-out of the vaccine, pent-up demand for high-touch services, and consumption patterns of the well-off” Bhandari said.