Roots of economic recovery deepen in July as Covid restrictions ease: ICRA

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With states easing COVID-19 restrictions, the roots of the economic recovery deepened in July 2021, according to a report.

The unlocking in the country was manifested in the improved performance of various high-frequency indicators of the industrial and service sector, mobility and toll collection in July 2021, according to a report from Icra Ratings.

With the further easing of state restrictions, especially in the southern states, the roots of the economic recovery deepened in July 2021. Despite a normalizing base, eight of the 15 high-frequency indicators showed encouraging improvement of their year over the year. annual growth (year-on-year) in July 2021, the agency’s chief economist Aditi Nayar said in a report.

In addition, 10 of the 13 non-financial indicators recorded a month-over-month (MoM) increase in July 2021, although the pace of improvement slowed from levels seen in June 2021, when the unlock at the level of l ‘State had started, she said.

Year-over-year performance of GST electronic invoices, fuel consumption, power generation, Coal India Limited (CIL) production, vehicle registrations, domestic passenger traffic, etc. improved in July 2021 compared to June 2021.

In addition, the deterioration in the year-over-year performance of some of the remaining indicators such as production of passenger vehicles (PV), scooters and motorcycles, was mainly due to the unfavorable base effect.

The report says, however, that the sequential growth momentum eased in July 2021, after registering a sharp rise in June 2021.

While 10 of the 13 non-financial indicators showed an increase in monthly terms in July 2021, the pace of this was lower than in June 2021, for indicators such as vehicle registrations, generation of electronic GST invoices and automatic exit, he said.

In contrast, port freight traffic, diesel consumption and rail freight showed a decline in MoM terms in July 2021, he said.

Nayar said that the volumes of seven of the 13 non-financial indicators (non-oil merchandise exports, TPS electronic invoices, power generation, CIL production, gasoline consumption, photovoltaic generation and rail freight traffic) exceeded by the times their pre-Covid level as well as the levels from April 2021 to July 2021.

As states began to unlock, mobility for retail and leisure saw a marked improvement, from around 60% below baseline at end May 2021 to 23% below baseline at end. July 2021 (seven-day moving average), she said.

FASTag toll collections rose 15.5% to reach Rs 2,980 crore in July 2021, while remaining slightly behind the record of Rs 3,090 crore in March 2021, she added.

The agency further said that the first data for August 2021 showed a mixed trend among the available indicators.

While gasoline sales by state refiners during the first half of August 2021 topped both a year ago and pre-Covid levels, those of diesel continued to show a behind on their pre-Covid performance, he said.

The average daily production of GST electronic invoices remained stable during the first half of August 2021, compared to July 2021.

Year-on-year rail freight growth stood at a solid 14.1% from Aug. 1-10, 2021, the agency added.

(Only the title and image of this report may have been reworked by Business Standard staff; the rest of the content is automatically generated from a syndicated feed.)


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