The PHDCCI Economic and Business Momentum Index

No. PR- 168

December 22, 2020

New Delhi


The PHDCCI Economic and Business Momentum Index

Economic recovery progressing towards Q4 level of FY 2019-20, GDP growth seen at 0.1% to 2% in Q3 and 2% to 4% in Q4 FY 2020-21: PHD Chamber

Cement, steel, consumer durables & capital goods sectors show remarkable recovery

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% to 2% in Q3 and 2% to 4% in Q4 FY 2020-21 are becoming strong with a higher growth trajectory in FY 2021-22 at 7.7%, 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% in Q1 2020-21 to (-) 7.5% in Q2 FY 2020-21, said Shri Sanjay Aggarwal, President, PHD Chamber of Commerce and Industry in a press statement issued here today.

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

The growth trend of PHDCCI EMB Index suggests that economy has potential to rejuvenate at more than 7.7% growth trajectory in the next financial year 2021-22, said Shri Sanjay Aggarwal.

GDP projections so far (in %)

Source: PHD Research Bureau, PHDCCI EBM Index

Note: Figure for Q1 & Q2 FY 2020-21 are actual, released by MOSPI; Figures for Q3 and Q4 FY 2020-21 are projections based on PHDCCI EBMI

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.

PHDCCI EBM Index: Monthly Trend (Base: 2018-19=100)

Source: PHD Research Bureau, PHDCCI EBM Index

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 Sh. 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 October 2020 from their lows of April 2020, said Shri Sanjay Aggarwal.

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, said Sh. Sanjay Aggarwal

Immediate policy attention is required towards credit access to industry and services sectors. Credit disbursement should be the top most priority at this juncture by the banking sector. 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 Shri Sanjay Aggarwal.

Going ahead, demand creation will have multiplier effects 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 Shri Sanjay 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 Shri Sanjay Aggarwal.

The Government can consider raising investment funding for the National Infrastructure Pipeline (NIP) through borrowings from overseas markets by issuance of overseas bonds through an SPV that could act as a mega Development Financial Institution- DFI, said Shri Sanjay Aggarwal.

Though, economy has exhibited strong signs of recovery in the recent months, however, to sustain the momentum, 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 Sh. Sanjay Aggarwal

Strengthening the MSMEs sector must also be on priority. It is suggested that the value chains of MSMEs should be enhanced; thus, making them more structurally competent to add to their efficiency, share in manufacturing sector, employment generation and the country’s overall export growth momentum, 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.


Base: 2018-19=100

Sr No Economic Indicators April 20 October 20 Improvement (Oct’20 – Apr’20)
1 IIP Consumer durable goods 5 102 97
2 IIP Consumer non-durable goods 64 122 58
3 IIP Capital Goods 8 97 89
4 IIP Intermediate Goods 39 112 74
5 Coal 97 106 9
6 Crude Oil 86 84 -2
7 Natural Gas 86 88 2
8 Petroleum Refinery Products 81 91 9
9 Fertilisers 101 108 7
10 Steel 22 108 86
11 Cement 17 111 94
12 Electricity 88 111 23
13 Consumption of Petroleum products 61 110 52
14 Export Merchandise 50 107 58
15 Export Services 121 121 1
16 India Freight Traffic 98 103 5
17 Credit to Agriculture 104 107 4
18 Credit to Industry 102 98 -3
19 Credit to service sector 111 110 -2
20 Personal Loans 112 109 -3
21 GST Collections 32 105 73
22 SENSEX 112 145 33
23 FDI Equity Inflows 74 210 135
24 External commercial borrowings 54 111 57
25 Unemployment 84 97 13
Composite Weighted Index 78 97 18

Source: PHD Research Bureau, PHDCCI EBM Index

Note: For calculation purpose, the October 2020 FDI figure is taken as average of 3 previous months; figures and difference are rounded off


Media Division

PHD Chamber of Commerce and Industry