Economic recovery in consolidation phase since January: ICRA

The pace of underlying growth in Indian economy remains subdued and does not foresee a sharp ramp up in pace of GDP expansion in Q4 FY21, according to investment information agency ICRA.

It said GDP growth in real terms will strengthen only modestly to 2.6 per cent in Q4 FY21 from 0.7 per cent in Q3 FY21.

As many as nine of the 15 high frequency indicators recorded a weakening of their year-on-year performance in January 2021 relative to December 2020.

This sub-set includes output of passenger vehicles, vehicle registrations, petrol consumption, ports cargo traffic, generation of GST e-way bills, bank credit and deposits.

In contrast, six indicators witnessed an improved YoY performance in January 2021 relative to December 2020 -- non-oil exports, electricity generation, rail freight traffic, scooter production, diesel consumption and domestic airline traffic.

However, the economic recovery entered into a consolidation phase in January 2021. After the broad-based improvement seen in December 2020, the YoY performance of a majority of early available economic indicators recorded a loss of momentum in January 2021 relative to the previous month.

This was led by a combination of factors like fading of favourable base effect, supply-side issues and price hikes, marking a contrast to improvement in sentiment brought on by the rollout of Covid-19 vaccines.

The monthly indicators tracked by ICRA include production of PVs, motorcycles, scooters, vehicle registrations, output of Coal India Ltd, electricity generation, non-oil merchandise exports, ports cargo traffic, rail freight traffic, generation of GST e-way bills, domestic airlines' passenger traffic, consumption of petrol and diesel, aggregate deposits and non-food credit of scheduled commercial banks.

( With inputs from ANI )