The phased lifting of state-wise restrictions has ushered in a recovery in the economic momentum, however, the performance of most high frequency indicators in June 2021 remained below the pre Covid-19 levels of June 2019, as well as April 2021.
According to Aditi Nayar, chief economist, ICRA: "With the normalisation of the base related to the unlocking after last year's stringent nationwide lockdown, the year-on-year (YoY) performance of 13 of the 15 high frequency indicators expectedly flattened in June 2021, relative to May 2021."
"More importantly, several indicators recorded a sequential improvement in June 2021, as the states started lifting restrictions with the subsiding of the second wave of Covid-19. While this confirms that a revival has set in, volumes for most non-financial indicators in June 2021 were weaker than the levels in both April 2021 and June 2019, suggesting that the recovery is incomplete."
As per the ratings agency, the momentum improved on a sequential basis for 10 of the 13 non-financial monthly indicators during June 2021.
Discouragingly, volumes in June 2021 trailed the June 2019 level for eight of the 13 non-financial indicators, and were weaker than April 2021 for nine indicators, highlighting that while a recovery has undoubtedly set in, it remains incomplete.
ICRA noted that diesel consumption stood out as the only indicator recording a contraction in YoY terms in June 2021, which reflects some shift of freight to the Railways amidst all-time high diesel prices, and tariff and non-tariff measures taken by the Indian Railways in August 2020 to boost the operations and improve efficiency.
"Given the further relaxation by many states in the ongoing month, we expect volumes to improve in sequential terms in July 2021. Encouragingly, the daily average generation of GST e-way bills has risen to 1.9 million in the first 11 days of July 2021 from the 1.8 million reported in the month of June 2021," Nair added.
"Moreover, the electricity demand data released by 'POSOCO' reveals that the pace of YoY growth rose considerably to 17.7 per cent in July 1-13, 2021 from 8.4 per cent in June 2021. However, this coincided with a lull in the rains, and its sustenance at such a high-level remains uncertain."
