India business activity falls to August 2020 levels

New Delhi: The raging second wave of Covid-19 infections in India continues to disrupt the economy. The Nomura India Business Resumption Index (NIBRI) suffered its biggest week-on-week fall to reach 75.9 in the week ending April 25.

The NIBRI is a weekly dashboard of ultra-high frequency data compiled by Nomura research; a value of 100 refers to pre-pandemic levels of economic activity. The NIBRI was last lower than 75.9 in the week ending August 30, 2020. It reached a value of 99.3 in the week ending February 23. That the NIBRI has fallen by almost 25 points in two months, captures the disruptive impact of the second wave of the pandemic on the economy.

As new infections continue to soar and more regions come under a lockdown or similar restrictions — Karnataka, Kerala and Assam, for instance, imposed tighter restrictions since April 26; Maharashtra is already under a lockdown as is Delhi — the NIBRI could fall further. This is bound to have an adverse effect on the economy.

“With more states extending restrictions, sequential momentum is likely to remain weak over the next month, hurting gross domestic product (GDP) growth in Q2 2020 (April-June 2020),” Nomura economists Sonal Varma and Aurodeep Nandi said in a research note.

Vaccinations will play a crucial role in muting the economic impact of the second wave.

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