Low Covid cases, Unlocks may put back economic recovery
To re-build for the high growth trajectory, the Government should frontload the National Infra Pipeline expenditure as private investment is not coming in shorter period, suggest PHDCCI
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Though, the economic recovery slowed in May 2021 due to daunting impact of second wave of Covid-19, the decline in new Coronavirus cases and gradual unlocking in many parts of India had given way for rebound in the economic recovery once again, PHD Chamber of Commerce and Industry has said in its latest Economic Business Momentum (RBM) Index.
The PHDCCI index is based on 25 leading economic and business indicators that have a bearing on country growth. PHDCCI EBM Index is a composite index of 25 lead economic and business indicators with base year at 2018-19 (100), which considers the demand and supply indicators to present a broad perspective of the economy. These include steel, intermediate goods, merchandise exports, GST collections and Sensex among others.
According to the EBM Index, lead economic and business indicators have shown a higher growth in May 2021 as compared with May 2020. The index of 25 lead economic and business indicators stood at 94.8 for May 2021 higher than 85.7 registered for May 2020 at the base of 2018-19 100.
The recovery trend in key economic indicators is indicating strengthened growth trajectory of Indian economy in the coming months, said PHDCCI president Sanjay Aggarwal. However, sequentially, the PHDCCI EBM Index has shown a decline for May 2021 to the level of 94.8 as compared to 100.3 for April 2021, due to drastic impact of the second wave on trade and industry in respect of the partial or complete lockdowns in many States, labour shortage, skyrocketing commodity prices and depressed demand.
Based on the May economic activity and movement of EBM Index, a significantly higher growth trajectory is anticipated for Q1 FY 2021-22. The quarterly movement of PHDCCI EBM Index and quarterly GDP growth rates are highly correlated at 0.9 as depicted, said Aggarwal.
Going ahead, effective policy measures are needed to support demand and to have a multiplier effect on production possibilities, expansion of employment in factories, expansion of capital investments and overall virtuous circle of the growth trajectory, said Aggarwal.
