Curfews, localised lockdowns hit mobility; business resumption plans affected too.
Even before a second Covid-19 wave threatened to play spoilsport, the demand in the economy was muted and Corporate India was struggling to retain the pricing power gained in a short period of fast-paced normalisation. Latest streams of high-frequency data signal GDP might contract at a rate sharper than 1.1% prognosticated by the National Statistical Office (NSO) in the March quarter. Lockdowns are back in a localised fashion and night curfews are being imposed in several urban areas, hitting mobility and raising the grim prospect of a further weakening of consumption demand.
Just before the second Covid wave hit the country, sections of Corporate India was going through a reset phase, which inflated raw material costs and core (non-oil, non-gold) imports. Corporate profitability is likely to be under greater pressure in Q4. Firms could defer their plans to increase capacity utilisation and roll out new investment/business decisions by another quarter, if not longer, due to the renewed uncertainties. Nomura India Business Resumption Index declined in recent weeks.
News Source:- Financial Express