Performance of high frequency indicators moderated in September: ICRA

ICRA on Thursday said continued base normalisation, emerging supply-side constraints and excess rainfall dampened the year-on-year (YoY) performance of most of the high frequency indicators in September 2021.

The YoY performance of 14 of the 15 high frequency indicators (except non-food bank credit) worsened in September compared to August this year, ICRA said.

This was on account of a combination of factors such as continued base normalisation (especially for motorcycles and scooters, domestic airline passenger traffic, and generation of GST e-way bills), supply side constraints (non-availability of semiconductors particularly for passenger vehicles or PVs) and excess rainfall (35 per cent above long period average in September).

Nevertheless, in quarterly terms, half of the indicators recovered above their pre-Covid levels in the second quarter of the current financial year, it said.  This compared well with the first quarter of the year, when only three out of the 14 indicators had exceeded the performance in Q1 FY'20, with activity suppressed by the second wave of Covid-19.

ICRA chief economist Aditi Nayar said, “The economic recovery widened in Q2 FY'22 as the crisis wrought by the second wave of Covid-19 abated, with a larger number of sectors bettering their pre-Covid performance, relative to the position in Q1 FY'22. Nevertheless, the revival was multi-speed, with a considerable variation in the pace of growth across sectors."

She said there is growing evidence of a K-shaped recovery.  This was evidenced by the sharp disparity in the performance of the stock markets, robust growth in direct tax collections and improved business sentiment, juxtaposed with the continued pessimism displayed by urban households in the RBI’s latest consumer confidence survey, Nayar said. The latter is a likely reflection of the lingering income uncertainty being faced by households that are dependent on the less formal and contact-intensive portions of the economy, she said.