Economic recovery progressing towards Q4 level of FY20: PHD Chamber

The continuous improvement in the key economic and business indicators signals that the worst is behind us and expectations of a positive GDP growth at 0.1 per cent to 2 per cent in Q3 and 2 per cent to 4 per cent in Q4 FY 2020-21 are becoming strong with a higher growth trajectory in FY 2021-22 at 7.7 per cent, according to PHDCCI EBM Index (Economic and Business Momentum Index).

The series of stimulus announcements by the Government in last 9 months under the AatmaNirbhar Bharat Abhiyaan 1.0, 2.0 and 3.0 along with the calibrated measures undertaken by the RBI have pulled the economy from the lows of Q1 FY 2020-21 (-) 23.9 per cent in Q1 2020-21 to (-) 7.5 per cent in Q2 FY 2020-21, said Sanjay Aggarwal, President, PHD Chamber of Commerce and Industry in a press statement issued on Tuesday.

The overall growth for the FY 2020-21 is expected to contract by (-) 7.9 per cent, said Aggarwal.

The growth trend of PHDCCI EMB Index suggests that economy has potential to rejuvenate at more than 7.7 per cent growth trajectory in the next financial year 2021-22.

On a monthly basis, PHDCCI EBMI (Economic and Business Momentum Index) has shown steady recovery from the lows of 78.3 in April 2020 to 85.7 in May 2020, 91.6 in June 2020, 95.5 in July 2020, 95.9 in August 2020, 96.5 in September 2020 and 96.7 in October 2020.

Steady growth of EBM Index is progressing towards the level of Q4 of 2019-20 as October 2020 EBM Index at 96.7 is very near the level of 97.1 in October 2019.

Economy is expected to recover to the level of Q4 of 2019-20 in the coming months of Q4 2020-21, said Aggarwal

PHDCCI EBM Index is a composite index of 25 lead economic and business indicators with base year at 2018-19, which considers the demand and supply parameters to present a broad perspective of the economy.

Out of the 25 lead economic and business indicators, 21 have shown a remarkable improvement in October 2020 from their lows of April 2020.

Strong recovery has been observed in the production of cement, steel, consumer durables and capital goods from the lows of April 2020. In the financial segment, FDI equity inflows have shown a remarkable recovery.