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Photo: Reuters
Photo: Reuters

Economic activity sustains momentum in November: Motilal Oswal

The growth in farm sector once again surpassed growth in non-farm sector during November 2020, the report said

MUMBAI : Motilal Oswal Financial Services said on Thursday its in-house economic activity index for India's real gross value added (EAI-GVA) grew for the third consecutive month but slower by 5.2% year-on-year in November following 6% growth in the previous month.

The growth in farm sector once again surpassed growth in non-farm sector during November 2020.

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However, the EAI-GDP index contracted just 4.2% year-on-year in November following a decline of 8.1% in October. The slower decline was largely attributable to 47% year-on-year growth in government consumption expenditure (GCE).

Excluding GCE, EAI-GDP contracted by 5.9% year-on-year in November versus a fall of 6.6% year-on-year in October, said Motilal Oswal.

Although the fall in personal consumption expenditure moderated further to minus 7.7% year-on-year in November, total investments declined 3.9% year-on-year during the month, faster than decline of just 2.3% year-on-year in October.

Overall, although EAI-GVA moderated in November, the momentum appears to have sustained. However, based on certain indicators available for December like the PMI indices, e-way registrations and power generation, the uptick appears to have sustained last month.

"Accordingly, we believe real GDP growth could be between minus 1 per cent and plus-1 per cent year-on-year in 3Q FY21 before higher growth is seen in 4Q FY21."

In any case, said Motilal Oswal, now that the mass rollout of COVID-19 vaccines is imminent, complete normalisation of economic activity is only a matter of time.

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