The normalisation process in the economy continued its pace for the latest reporting week as well on the back of higher mobility in the holiday season, a Japanese brokerage said on Monday.
Nomura India Business Resumption Index (NIBRI) picked up to 94.5 for the week ending January 3 from an average of 91.7 December, as per a statement.
The rise in the index was "led by an improvement in mobility indices, in sync with the holiday season", the statement said.
It can be noted that economic activity had reached a trough due to the lockdown to contain the spread of COVID-19 infections in mid-2020 and led analysts to downwardly revise their estimates of economic performance.
However, the recovery has been faster than many expected after the unlock process and the RBI now expects the economy to contract by 7.5 per cent in FY21.
The brokerage said the power demand, which rose 2.7 per cent and 3.1 per cent over the preceding two weeks, corrected 2.7 per cent week-on-week in the latest reporting week.
The labour participation rate eased to 40.3 per cent in early January from 40.9 per cent in December, it said.
The index averaged higher in December (91.7) than in November (86.3) and is starting January at another high (94.5), the statement said.
"This faster normalisation reflects a further moderation in new cases, despite the festive and winter season. In tandem, activity data like auto sales, import growth, GST proceeds, manufacturing PMI and diesel sales improved," it added.
The key short-term risks include a weak global growth and a sudden volte-face on domestic pandemic control, it said.
Over the medium-term, easier financial conditions, stronger global demand and accelerated vaccinations could lead to an economic upcycle in 2021, it noted.