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As the third wave of covid has spread across the country, business activities have taken a hit. The Nomura India Business Resumption Index, which tracks high frequency data, has fallen 20 percentage points since the third wave struck. However, Nomura feels that as virus case growth has stabilised, mobility and activity should recover in February-March. 

The Nomura India Business Resumption Index fell to 100.5 for the week ending 23 January from 102.2 in the prior week, as mobility continues to plummet. The current index level indicates only 0.5 pp above pre-pandemic. Google workplace and retail & recreation mobility fell by 10.7 pp and 4.4 pp, respectively, from the previous week, while the Apple driving index inched 1.7pp higher after a massive 84pp fall over the past two weeks. The labour participation rate inched up to 39.8%, while power demand rose by 4.9%week-on-week as payback after three consecutive weeks of contraction. 

Even as new daily cases track above 30000, up from 25000 last week, the rate of increase has moderated. A few states, including West Bengal and Delhi, have reported lower cases than last week, and death rates remain stable. 

Economic data are mixed: air traffic continues to fall steeply (down 36% from December peak), but railway passenger revenues have stabilized and freight revenues remain robust.  

Nomura has recently lowered their gross domestic product (GDP) growth forecast to 8.7% in FY22 (from 9.2%). It expects the upcoming Budget on 1 February to prioritise growth, with directional fiscal consolidation to 6.4% of GDP in FY23 from 6.8% of GDP expected in FY22. 

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