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An uneven recovery unfolding in September, Icra says

Looking ahead, with a gradual improvement in the economic situation, the waning impact of high healthcare costs related to the second wave and the improvement in the coverage of covid-19 vaccines, confidence levels should improve, Icra economist Aditi Nayar said.Premium
Looking ahead, with a gradual improvement in the economic situation, the waning impact of high healthcare costs related to the second wave and the improvement in the coverage of covid-19 vaccines, confidence levels should improve, Icra economist Aditi Nayar said.

  • While the performance of the high frequency indicators in August was decidedly uneven, especially when compared to the pre-covid levels, the early data for September remains mixed, Icra chief economist Aditi Nayar says

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NEW DELHI: High frequency indicators posted an uneven performance in August, and a mixed trend continues in September, rating agency Icra Ltd said on Monday, hoping that the rising confidence will boost demand during the festive season.

Icra chief economist Aditi Nayar said that while the performance of the high frequency indicators in August was decidedly uneven, especially when compared to the pre-covid levels, the early data for September remains mixed. The daily average generation of GST e-way bills in September so far, is similar to August. However, pre-festive season stocking should boost this metric in October, she added.

The year-on-year (y-o-y) rail freight growth has halved to 8.2% during 1-10 September, but this is on account of the kicking in of the base effect related to the incentives extended last year. While the sales of state refiners in the first half of September exceeded the pre-covid levels for petrol, those for diesel declined. With excess rainfall in the ongoing month (29% above LPA), the y-o-y growth in electricity demand has shrunk to 0.2% during September 1-19 from 17.1% in August.

Icra said heavy rains are likely to impair the performance of mining and construction as well, reversing the temporary gains of the previous month. Further, semiconductor non-availability is likely to supress auto production in both September and October.

“Looking ahead, with a gradual improvement in the economic situation, the waning impact of high healthcare costs related to the second wave and the improvement in the coverage of covid-19 vaccines, confidence levels should improve. This should enhance consumption during the festive season, manifesting a perceptible improvement in the performance of the high frequency indicators in October," Nayar added.

The monthly indicators tracked by Icra include the production of PVs, motorcycles, scooters, vehicle registrations, output of Coal India Ltd, electricity generation, non-oil merchandise exports, ports cargo traffic, rail freight traffic, generation of GST e-way bills, domestic airlines’ passenger traffic, consumption of petrol and diesel, aggregate deposits and non-food credit of scheduled commercial banks.

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