Indian Economic activity has shown a big improvement in December 2020 as against November, showing a return of demand as to pre- covid levels, according to Icra report.
The report further said that most of the indicators have displayed a year-on-year (y-o-y) expansion in December 2020, which signals a "tentative return to pre-COVID normalcy".
"Economic activity rebounded solidly in December 2020 relative to the previous month, reflecting a pick-up in demand after the temporary post-festive slack and year-end discounts," the agency's principal economist Aditi Nayar was quoted as saying by news agency PTI.
12 of the 15 high-frequency indicators tracked by the agency recorded an improved year-on-year performance in December 2020, relative to November 2020, including electricity generation, the output of passenger vehicles (PVs), motorcycles, vehicle registrations, and fuel consumption.
The year-on-year growth in the generation of GST e-way bills nearly doubled to 15.9 per cent in December 2020 from 8.1 per cent in the previous month, it pointed out, adding the robust performance of e-way bills in December 2020 suggests that the GST collections will remain healthy in January as well.
Nayar said except for scooter production, diesel consumption and domestic airlines' passenger traffic, 12 indicators showed positive surge inactivity, albeit at a varying pace.
Regardless of monthly instability and uneven performance across different sectors, there was a widespread recovery in volumes in the third quarter of the financial year 2021 relative to the preceding second quarter, she said.
While this predicts well for the upcoming GDP print for the third quarter of the financial year 2021, rising raw material and wage costs have partly offset the positive impact of rising volumes on profitability in some non-agricultural sectors, she said, adding that for now, the agency is maintaining its 1 per cent of the third quarter GDP contraction estimate.
