Continued unlocking across the country has accelerated the improvement in various high frequency industrial and service sector indicators during July 2021, said ICRA.
According to Aditi Nayar, Chief Economist, ICRA: "With the further easing of the state-wise restrictions, especially across the southern states, the roots of the economic recovery deepened in July 2021. Despite a normalising base, eight of the 15 high frequency indicators recorded an encouraging improvement in their year-on-year (YoY) growth in July 2021."
"Moreover, 10 of the 13 non-financial indicators recorded a month-on-month (MoM) uptick in July 2021, although the pace of the improvement expectedly eased from the levels seen in June 2021, when the state-wise unlocking had commenced."
Besides, ICRA highlighted that the YoY performance of GST e-way bills, fuel consumption, electricity generation, output of Coal India Limited (CIL), vehicle registrations, domestic passenger traffic, amongst others improved in July 2021 compared to June 2021.
Furthermore, the worsening in the YoY performance of some of the remaining indicators such as the output of passenger vehicles (PVs), scooters and motorcycles, was primarily due to the unfavourable base effect.
However, the sequential momentum of growth eased in July 2021, after having recorded a sharp uptick in June 2021.
In contrast, ports cargo traffic, diesel consumption and rail freight displayed a decline in MoM terms in July 2021.
"To gauge the strength of the recovery across sectors, we have compared the performance of indicators in July 2021 with the pre-Covid level of July 2019, as well as the levels in April 2021. The volumes of seven of the 13 non-financial indicators rose above both their pre-Covid as well as April 2021 levels in July 2021," she said.
"While three indicators, namely, the output of scooters and motorcycles, and vehicle registrations surpassed their April 2021 levels, they trailed the level of July 2019. In contrast, domestic passenger traffic, ports cargo traffic and diesel consumption reported lower volumes in July 2021, relative to both July 2019 and April 2021."
In addition, the ratings agency cited that early data for August 2021 indicates a mixed trend across the available indicators.
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