ICRA which is a rating agency stated on Friday that the growth momentum lost steam in November 2021 on the back of “some satiation” of pent-up demand as well as supply chain disruptions in parts of southern India on account of ill-timed rainfall.
“As many as 12 of the 15 lead indicators recorded a deterioration in their YoY performance in that month, relative to October 2021. Moreover, the number of indicators surpassing their pre-Covid levels eased to seven in November 2021 from nine in October 2021.
“The early data for December 2021 is mildly positive, and second shot coverage appears set to rise to 61 percent of Indian adults by the end of the month. However, it remains to be seen whether the existing Covid-19 vaccines will offer protection against the Omicron variant and avert a third wave in India,” it stated.
The rating agency even stated that amidst the heightened uncertainty that is generated by Omicron, convincing signs of a durable and sustainable recovery are yet to emerge.
“The YoY performance of 12 of the 15 high-frequency indicators deteriorated in November 2021 compared to October 2021 suggesting that the growth momentum lost steam, with some satiation of pent-up demand after the festive season.
“On the other hand, vehicle registrations, passenger vehicles (PV) output and non-food bank credit of scheduled commercial banks showed a modest YoY improvement in November 2021, relative to the previous month.”
In month-on-month (MoM) terms, the agency cited that 9 of the 13 non-financial indicators saw a decline in November 2021, broadly reflecting the impact of a higher number of festive-related holidays.
“Moreover, untimely heavy rainfall in the southern states appears to have led to supply chain disruptions, weighing upon activity in November 2021. Only the output of PV and Coal India Ltd (CIL), domestic airlines’ passenger traffic, and auto retail volumes recorded an improvement in November 2021, relative to the previous month.”
“In addition, ‘FASTag’ toll collections and retail payments declined in November 2021, after having reached all-time highs in October 2021, while the mobility for retail and recreation continued to improve sequentially.”
The trend, the ICRA pointed out there was mixed when it was compared to the pre-Covid volumes of November 2019, with 7 of the 13 non-financial indicators which recorded an improvement in November 2021 and 6 recordings a deterioration.
“This is weaker than the performance in October 2021, when nine of the 13 indicators were higher than pre-Covid, the performance of motorcycle output and diesel consumption has slipped to below pre-Covid levels in November 2021 from above pre-Covid in October 2021.
“Early data for December 2021 reveals that the daily average generation of the GST e-way bills improved to 2.2 million during December 1-12, 2021, from the five-month low 2.0 million recorded in November 2021; however, we don’t expect October 2021 high to be surpassed.”
In addition, merchandise exports have reported that it’s expanded by 44.4 percent in YoY terms during the month of December 1-14, 2021, although the momentum might slacken in the later part of the month during the year-end holiday period.
“After a YoY contraction in November 2021, the sales of petrol and diesel of state refiners have grown in the first half of December 2021.
“Moreover, the YoY growth in electricity demand rose to 2.9 percent during December 1-14, 2021, from 2.1 percent in November 2021 whereas the rail freight growth eased to 5.9 percent YoY during December 1-10, 2021 from 6.1 percent in November 2021,” the agency stated.