The Japanese brokerage firm said no quarter would see positive growth in the ongoing fiscal, resulting in -6.1% gross domestic product (GDP) growth rate for FY21.
Further, the Nomura India Business Resumption Index (NIBRI) flatlined at 73.4 for the week ending August 23, suggesting a slower pickup once the post-lockdown euphoria eases, the report said.
The NIBRI is a weekly tracker of the pace of resumption of economic activity.
“We currently believe Q2 (CY) was the low point for growth, and expect GDP growth to plummet to -15.2% y-o-y from 3.1% in Q1,” Nomura said.
A comprehensive sectoral indicator analysis of the April-June quarter performance showed the sharpest declines were seen in domestic passenger vehicle and two-wheeler sales, investment in capital goods, steel output, imports by value (excluding oil and gold), and railway and aviation passenger traffic.
While conditions improved in July, the recovery remained uneven with aggregate supply reaching about 82% of pre-pandemic levels, however, aggregate demand stood at 62% , according to the Nomura India Normalization Index.
Demand took a larger hit due to higher precautionary savings by consumers amid rising income uncertainty. On the other hand supply was constrained due to the lockdown and hence more responsive to easing of restrictions.
Such differences were not limited to just demand and supply. Rural consumption grew faster compared to its urban counterpart while the industrial sector (81%) recovered faster than services (20.2%), the report said.
“We also find that the sequential pace of normalization is moderating, suggesting that some sectors may plateau much before they reach their pre-pandemic levels,” the report said.
In terms of August data, the NIBRI remained constant for the past two weeks. While mobility data was mixed, other indicators such as labour participation rate and power demand dropped for the second week in a row, it said.
“As quasi-lockdown conditions persist, and pent-up demand eases, the muddling trends in the NIBRI suggest that the process of normalization may turn out to be more prolonged than expected,” Nomura said.