Economic activity rebounded solidly in December 2020, relative to the previous month, reflecting factors such as a pick-up in demand after the temporary post-festive slack and year-end discounts, as well as an expected waning of the unfavourable base effect related to fewer working days in November 2020, ICRA has stated in its report.
"As many as 12 of the 15 high frequency indicators recorded an improved year-on-year (YoY) performance in December 2020, relative to November 2020, including electricity generation, output of passenger vehicles (PVs) and motorcycles, vehicle registrations and fuel consumption. In particular, the pickup in the generation of GST e-way bills, as well as the considerable expansion in rail freight traffic (despite a mild easing to +8.7% in Dec 2020 from +9.0% in Nov 2020), offer encouraging signals of the pace of revival in economic activity," the rating agency has said.
According to ICRA, in addition to the dip in growth of rail freight, the YoY performance of the output of Coal India Limited (CIL) and scooters, deteriorated sequentially in December 2020, with the former two partly dampened by a high base.
"The weaker performance of scooters relative to motorcycles and PVs is indicative of the uneven revival in consumption demand, with a divergent impact of the pandemic on different segments of society.
Moreover, 12 indicators (except for scooters, diesel and domestic airlines' passenger traffic) recorded a YoY growth in December 2020, albeit at a varying pace. While this partly benefitted from a low base, it does signal a tentative return to pre-Covid normalcy," the rating agency has said.