'GDP to grow at 13.5% in FY22; economic activity on verge of normality': Nomura

Japanese brokerage Nomura said that economic activity is on the 'verge of normality' after being severely hit by the coronavirus pandemic. The firm said that India GDP will grow at 13.5 per cent in FY22. The Nomura India Business Resumption Index (NIBRI) picked up to 98.1 (provisionally) for the week ending February 14, from 95.9 in the preceding week, Nomura said.

Nomura's estimates are higher than the growth rate pegged by the Reserve Bank of India. The apex bank expects GDP to jump by 10.5 per cent in FY22, after contracting by 7.7 per cent in FY21.

The brokerage said that it expects real GDP to contract by 6.7 per cent in FY21 and grow by 13.5 per cent in FY22.

Nomura said that for the week to February 14, mobility indicators continued to pick up.

Power demand fell by 0.1 per cent week-on-week but the brokerage said that this may be likely due to a payback from the stellar 9.6 per cent rise during the preceding week. It said that labour participation rate inched down to 40.5 per cent from 40.9 per cent in the week before.

The brokerage said its proprietary index has been on an uptrend since hitting its trough during the strict lockdown in April last year. "This supports our view that sequential momentum remains positive and that year-on-year GDP growth likely moved into positive territory, at 1.5 per cent in Q4 2020 (from -7.5 per cent in Q3) and 2.1 per cent in Q1 2021," it said.

The continued recovery in the index is strongly predicated on containment of the pandemic, the brokerage said, adding it is upbeat on growth prospects due to the confluence of fiscal activism, the lagged effects of easy financial conditions, base effects and faster global growth.

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