Economic activity sustains momentum in Nov: Motilal Oswal

Motilal Oswal Financial Services said on Thursday its in-house economic activity index for India's real gross value added (EAI-GVA) grew for the third consecutive month but slower by 5.2 per cent year-on-year in November following 6 per cent growth in the previous month.

Motilal Oswal Financial Services said on Thursday its in-house economic activity index for India's real gross value added (EAI-GVA) grew for the third consecutive month but slower by 5.2 per cent year-on-year in November following 6 per cent growth in the previous month. The growth in farm sector once again surpassed growth in non-farm sector during November 2020.

However, the EAI-GDP index contracted just 4.2 per cent year-on-year in November following a decline of 8.1 per cent in October. The slower decline was largely attributable to 47 per cent year-on-year growth in government consumption expenditure (GCE). Excluding GCE, EAI-GDP contracted by 5.9 per cent year-on-year in November versus a fall of 6.6 per cent year-on-year in October, said Motilal Oswal.

Although the fall in personal consumption expenditure moderated further to minus 7.7 per cent year-on-year in November, total investments declined 3.9 per cent year-on-year during the month, faster than decline of just 2.3 per cent year-on-year in October. Overall, although EAI-GVA moderated in November, the momentum appears to have sustained. However, based on certain indicators available for December like the PMI indices, e-way registrations and power generation, the uptick appears to have sustained last month.

"Accordingly, we believe real GDP growth could be between minus 1 per cent and plus-1 per cent year-on-year in 3Q FY21 before higher growth is seen in 4Q FY21." In any case, said Motilal Oswal, now that the mass rollout of COVID-19 vaccines is imminent, a complete normalisation of economic activity is only a matter of time.