The PHDCCI Economic and Business Momentum (EBM) Index

No. PR- 019

April 23, 2021

New Delhi

The PHDCCI Economic and Business Momentum (EBM) Index

Economic activity consolidates at pre-COVID levels in Q4 2020-21, Government should act swiftly to provide substantial stimulus and reform measures to support emerging growth scenario: PHD Chamber

With sharp recovery in the key economic and business indicators in the Q3 FY 2020-21, the economy has returned to the pre-COVID levels in Q4 2020-21, however, government should act swiftly to support the emerging growth scenario by providing substantial stimulus and reform measures to mitigate the daunting impact of second wave of pandemic on economy, said Mr. Sanjay Aggarwal, President, PHD Chamber of Commerce and Industry in a press statement issued here today.

Second wave of Covid-19 has struck like a storm throughout the country. The impact is more than the previous wave in 2020, said Mr. Sanjay Aggarwal

The Central Government had last year acted swiftly to mitigate the daunting impact of Covid pandemic with a great support to people, trade and industry, the same steps are needed at this juncture once again, said Mr. Aggarwal

PHDCCI Economic & Business Momentum (EBM) Index of the 25 lead economic and business indicators has improved to the level of 99.4 in February 2021 at the base of 2018-19 = 100, said Mr. Sanjay Aggarwal.

On the basis of recent movement of PHDCCI EBM Index, PHD Chamber projects more than 1% growth rate of GDP in Q4 FY 2020-21, said Mr Sanjay Aggarwal

Calibrated measures are required at this juncture to maintain the growth momentum and to achieve an anticipated growth trajectory of a 11% GDP growth rate in FY 2021-22, said Mr. Sanjay Aggarwal

GDP growth rate at 0.4% for Q3 FY 2020-21 has been very much in line with our projections in the PHDCCI Economic and Business Momentum (EBM) Index released on February 22, 2021, in which we had estimated that the GDP growth will be at around 0.1% to 1% in Q3 FY 2020-21, said Mr Sanjay Aggarwal.

The quarterly movement of PHDCCI EBM Index and quarterly GDP growth rates are highly correlated at 0.9 as depicted in Chart-2, said Mr. Aggarwal

Chart-1 : PHDCCI EBM Index: Monthly Trend (Base: 2018-19=100) Chart-2 : PHDCCI EBM Index (Base: 2018-19=100) and GDP Growth Rates (in %): Quarterly Trend

Source: PHD Research Bureau, PHDCCI EBM Index; GDP growth figures compiled from MOSPI

Note: GDP growth figure for Q4 FY 2020-21 is projection based on PHDCCI EBM Index

Lead economic and business indicators such as cement, steel, consumer durables, capital goods, GST collections, external commercial borrowings, FDI equity inflows and IIP Capital Goods have shown a marvelous improvement in the recent months, said Mr. Sanjay Aggarwal.

PHDCCI EBM (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, 96.8 in October 2020, 98.4 in November 2020, 99.2 in December 2020, 99.7 in January 2021 and 99.4 in February 2021, with a base of 2018-19=100, said Mr. Aggarwal.

The 25 indicators composite EBM Index of the February 2021 at 99.4 is very near the level of 100.3 in February 2020, he said.

However, the EBM index during the period April –February of FY 2020-21 stands at 93.8 as compared with April –February FY 2019-2020 at 99.6, said Mr. Aggarwal.

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 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 January 2021 from their lows of April 2020, said Mr. Sanjay Aggarwal.

The growth trend of PHDCCI EBM Index suggests that economy has potential to accelerate a growth rate of 11% in the next financial year 2021-22 on the back of various effective and meaningful reforms undertaken by the Government, said Mr. Sanjay Aggarwal.

At this juncture, immediate policy attention is required towards credit access to industry and services sectors. Credit disbursement should be at the top priority at this juncture by the banking sector, he said.

The focus should be on ensuring provision of hassle free disbursements of loans vis-à-vis enhanced liquidity for MSMEs, especially in rural sectors, said Mr Sanjay Aggarwal.

The Central Government had last year extended the timelines for compliances under various corporate laws such as Companies Act, 2013, SEBI Act and Regulations and GST & Income tax provisions, the same extensions are required this year also, said Mr. Sanjay Aggarwal

Going ahead, policy measures are needed to support demand creation and to have a multiplier effect on enhanced production possibilities, expansion of employment in factories, expansion of capital investments and overall virtuous circle of growth and development of Indian economy, said Mr. Aggarwal

The increased spending on infrastructure will give a multiplier effect to rejuvenate the aggregate demand in the economy and to mitigate the daunting impact of COVID-19 on the economy. Undoubtedly, robust growth of infrastructure is the key ingredient to realize the vision of Aatmanirbhar Bharat, said Mr Sanjay Aggarwal.

Also, there is a need to lower interest rates for consumers and businesses, lesser compliances for MSMEs vis-à-vis ease of doing business at the ground level and a lower tax regime to increase the personal disposable income of the people, said Shri Sanjay Aggarwal.

PHDCCI EBMI (Economic and Business Momentum Index) is a composite index of lead economic and business indicators including 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




Base: 2018-19=100

Sr No Economic Indicators Apr-20 Feb-21 (Feb’21 – Apr ’20)
1 IIP Consumer durable goods 5 108 103
2 IIP Consumer non-durable goods 64 108 44
3 IIP Capital Goods 8 104 97
4 IIP Intermediate Goods 39 114 75
5 Coal 97 116 19
6 Crude Oil 86 83 (-)3
7 Natural Gas 86 91 5
8 Petroleum Refinery Products 81 102 21
9 Fertilisers 101 107 6
10 Steel 22 111 89
11 Cement 17 135 118
12 Electricity 88 118 30
13 Consumption of Petroleum products 58 106 48
14 Export Merchandise Growth 50 112 62
15 Export Services 121 128 7
16 India Freight Traffic 98 107 9
17 Credit to Agriculture 104 110 6
18 Credit to Industry 102 100 (-)2
19 Credit to service sector 111 109 (-)2
20 Personal Loans 112 110 (-)2
21 GST Collection 32 113 81
22 SENSEX (Daily average) 112 184 72
23 FDI Equity Inflows 74 208 134
24 External commercial borrowings 54 140 86
25 Unemployment 84 97 13
Composite Weighted Index 78 99 21

Source: PHD Research Bureau, PHDCCI EBM Index Note: For calculation purpose, the February 2021 FDI figures are estimated on the basis of available data of last 3 months; figures and difference are rounded off


Media Division

PHD Chamber of Commerce and Industry