“Overall, ebbing pandemic risk suggests that the ‘vaccine pivot’ in activity might be underway without waiting on the vaccine, leading to faster normalization,” the firm said in a note on Tuesday.
The Nomura India Business Resumption Index (NIBRI) sharply picked up to 96.5 for the week ending February 7, from 94.4 in the previous week, indicating a faster pace of normalisation over January.
The improvements in the index, which covers high frequency indicators like mobility indices, power demand and labour participation, came on the back of sober growth in the previous month when the NIBRI dropped to 92.7 for the week ended January 24.
“Also the recent Union Budget suggests the government aims to significantly dial up spending in Q1 (Q4FY21), which may prove to be a growth booster,” it added.
Mobility indices gave mixed signals as Google’s workplace and retail and recreation mobility indices recovered from a week ago while the Apple driving index declined.
On the other hand, power demand showed a sharp improvement of 9.6% against a marginal 0.4% contraction last week. Similarly, the labour participation rate inched up to 40.9% from 40.6% in the week earlier, Nomura said.
Going forward, the promise of ‘fiscal activism’ by the government would amplify the tailwinds for the Indian economy, said Nomura economists, Sonal Varma and Aurodeep Nandi, in the note.
“Further out, the promise of continued fiscal activism amplifies the already strong tailwinds of the ‘vaccine pivot’, easy financial conditions, base effects and faster global growth, bolstering our call for GDP growth averaging 13.5% y-o-y in FY22 (RBI: 10.5%), versus -6.7% in FY21,” they said.