The Nomura India business resumption index fell to 102.9 for the week ending January 16 from 107.9 in the previous week, three percentage points above its pre-pandemic levels. There has been an inevitable drop in mobility – with the Apple driving index down 14.4 percentage points, Google retail and recreation mobility 11.1 percentage points lower, and workplace mobility down 1 percentage point from the previous week.
Separately, data analytics firm QuantEco’s DART (Daily Activity and Recovery Tracker) index for the week ending January 16 witnessed its third consecutive weekly contraction. Although the pace of moderation eased from last week.
The third wave of the pandemic has led several states to impose curbs to prevent a rapid spread of the virus. This has hurt such contact-intensive sectors as restaurants, tourism, hospitality and airlines to a large extent, triggering worries about the impact on overall growth in the months ahead.
But experts and the RBI are of the view that the impact on growth is likely to be less severe this time and the economy will resume its momentum once the cases start easing and curbs are lifted. The central bank’s ‘State of the Economy’ report has said that the trajectory of Omicron is more likely to be a flash flood than a wave and aggregate demand conditions remain resilient.
The DART index showed that mobility to workplaces, which so far had shown resilience, slipped once again below the baseline of 100. In a lone bright spot, e-way bills, rail freight and electricity generation continue to hold up well, in a reflection of lower restrictions on industrial activity.
“While the third consecutive drop in DART index did not come as a surprise, the pace of decline in economic activity, despite restrictions, remains fairly diluted compared to previous waves. In a span of just three weeks, DART index has wiped off all its post-pandemic upside to slip below the baseline of 100. This, to our minds, reflects a faster response of the economy (both businesses and consumers alike) to the virus upheavals. As the tide of Covid cases turns, the current downtime in economic activity could prove to be short, followed by as swift a jumpstart in mobility and economic activity once again. From a growth perspective, the impact of Omicron is likely to perhaps be limited to Q4 FY22 from a timeline perspective,” QuantEco said in a note.