The PHDCCI Economic and Business Momentum (EBM) Index

No. PR- 083
August 19, 2021
New Delhi

The PHDCCI Economic and Business Momentum (EBM) Index

PHD Chamber projects FY 2021-22 GDP growth at 10.25%

Effective policies along with the improved business sentiments enhance growth prospects

The PHD Chamber of Commerce and Industry projects a double digit GDP growth trajectory at 10.25% in FY 2021-22, supported by the effective policies of the Government and improved business sentiments, said Sanjay Aggarwal, President, PHD Chamber of Commerce and Industry, in a press statement issued here today.

According to the PHDCCI Economic & Business Momentum (EBM) Index, the 25 lead economic and business indicators have shown a significant recovery at 97.7 for Q1 FY 2021-22 as compared to 85.2 for Q1 FY 2020-21, at the base of 2018-19 = 100.

On the basis of recent movement of PHDCCI EBM Index, PHD Chamber projects GDP growth in the range of 15-20% for Q1 FY 2021-22, 7-10% for Q2 FY 2021-22, 6-10% for Q3 FY 2021-22 and 5-9% for Q4 FY 2021-22. The overall GDP growth is projected at 10.25% for FY 2021-22, said Sanjay Aggarwal.

PHDCCI GDP Growth Projections (FY 2021-22)

Lead economic and business indicators have shown a higher growth in June 2021 as compared with June 2020. PHDCCI Economic & Business Momentum (EBM) Index at 98.0 for June 2021 is higher as compared with 91.6 for June 2020, said Sanjay Aggarwal.

Economic recovery so far (Y-o-Y)

Source: PHD Research Bureau, PHDCCI EBM Index

Lead economic and business indicators such as steel, merchandise exports, external commercial borrowings and SENSEX have shown a noteworthy improvement in June 2021 as compared to the June 2020, said Sanjay Aggarwal.

The improvement in key economic indicators is signaling broad based recovery in the coming months which will be higher than the pre-COVID economic activity, said Sanjay Aggarwal.

Sequentially, the PHDCCI EBM Index has shown an increase for June 2021 to the level of 98.0 as compared to 94.7 for May 2021, due to significant pick-up in the economic activity and accelerated vaccination drive in many parts of the country, said Sanjay Aggarwal.

Economic recovery so far (Sequential)

Source: PHD Research Bureau, PHDCCI EBM Index

The quarterly movement of PHDCCI EBM Index and quarterly GDP growth rates are highly correlated at 0.8 as depicted in Chart-2, said Sanjay Aggarwal.

Source: PHD Research Bureau, PHDCCI EBM Index; GDP growth figures compiled from MOSPI; Q1 FY 2021-22 GDP figures is estimated by PHD Chamber

At this juncture, there is a need to further fuel the drivers of household consumption and private investments to enhance the aggregate demand in the economy as it will have an accelerated effect on expansion of capital investments in the country, said Sanjay Aggarwal.

The Government should frontload the National Infra Pipeline expenditure as increased spending on infrastructure will give a multiplier effect to rejuvenate the aggregate demand in the economy. Undoubtedly, robust growth of infrastructure is the key ingredient to realize the vision of Aatmanirbhar Bharat, said Sanjay Aggarwal.

More and more direct benefit transfers needs to be considered for the urban and rural poor under the various welfare schemes in addition to the free distribution of dry rations till Diwali as already announced by the Hon’ble Prime Minister, he said.

Vaccination of population should be continued with a more faster pace, let’s target to vaccinate at least half of the population with both the doses by end September 2021, said Sanjay Aggarwal

PHDCCI EBM (Economic and Business Momentum) Index has shown steady recovery from the lows of 78.3 for April 2020 to 100.3 for April 2021, 94.7 for May 2021 as compared with 85.7 for May 2020 and 98 for June 2021 as compared to 91.6 in June 2020, with a base of 2018-19=100.

PHDCCI EBM Index is a composite index of 25 lead economic and business indicators with base year at 2018-19=100, which considers the demand and supply indicators to present a broad perspective of the economy. The 25 indicators include the IIP Consumer durable goods, IIP Consumer non-durable goods, IIP Capital Goods, IIP Intermediate Goods, Coal, Crude Oil, Natural Gas, Petroleum Refinery Products, Fertilisers, Steel, Cement, Electricity, Consumption of Petroleum products, Export Merchandise, Export Services, India Freight Traffic, Credit to Agriculture, Credit to Industry, Credit to service sector, Personal Loans, GST Collections, SENSEX, FDI Equity Inflows, External commercial borrowings and Unemployment.

Full PHDCCI EBM Index report attached

PHDCCI EBM Index

Base: 2018-19=100

Source: PHD Research Bureau, PHDCCI EBM Index Note: For calculation purpose, the FDI figure for April and May 2021 are moving average of last 3 months; figures are rounded off

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Media Division

PHD Chamber of Commerce and Industry