The PHDCCI Economic and Business Momentum (EBM) Index

No. PR- 197

January 21, 2021

New Delhi

The PHDCCI Economic and Business Momentum (EBM) Index

PHDCCI revises FY 2020-21 growth projection from (-)7.9% to (-)7.2%, speed of recovery faster than expected, says the industry body

The industry body expects growth to accelerate at 9.4% in FY 2021-22

The industry body PHDCCI has revised its growth projection from (-)7.9% to (-)7.2% on the back fast recovery of lead economic indicators such cement, steel, consumer durables, capital goods, GST collections, passenger car sales, among others, said Shri Sanjay Aggarwal, President, PHD Chamber of Commerce and Industry, in a press statement issued here today.

The continuous improvement in the key economic and business indicators has strengthened the expectations of a positive GDP growth at more than 1% in Q3 and more than 3% in Q4 FY 2020-21, said Shri Sanjay Aggarwal.

The PHDCCI EBM (Economic and Business Momentum) Index has moved to 98.2 in the month of November as compared with 97.0 in the month October 2020. The EBM Index during the period April – November of FY 2020-21 stands at 92.3 as compared with April – November FY 2019-2020 at 99.6, said Shri Aggarwal.

The industry body had projected FY 2020-21 GDP growth at (-)7.9% on 21st October 2020 in its first release of Economic and Business Momentum Index, however, considering the speed of recovery during the last 3 months, the growth projection has been revised by 0.7 basis points from (-) 7.9% to (-)7.2% for the current financial year 2020-21, said Shri Sanjay Aggarwal.

The growth trend of PHDCCI EBM Index suggests that economy has potential to accelerate at 9.4% growth trajectory in the next financial year 2021-22, said Shri Sanjay Aggarwal.

GDP Growth Rates (in %): FY2020-21 PHDCCI EBM Index: Monthly Trend (Base: 2018-19=100) 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 figures for Q3 and Q4 FY 2020-21 are projections based on PHDCCI EBM 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 low growth of (-)23.9% in Q1 FY 2020-21 to (-)7.5% in Q2 FY 2020-21 in the extremely difficult time of Pandemic COVID-19, said Shri Sanjay Aggarwal.

On a monthly basis, 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, 97.0 in October 2020 and 98.2 in November 2020.

Continuous growth of EBM Index is progressing towards the level of Q4 of 2019-20 as November 2020 EBM Index at 98.2 is very near the level of 99.5 in November 2019. Economy is expected to recover to the level of Q4 of 2019-20 in the coming months of Q4 2020-21, said Shri Sanjay 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, 22 have shown a remarkable improvement in November 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 recent months. In the financial segment, FDI equity inflows have shown a remarkable recovery, said Shri 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.

The Reforms such as emergency credit line for MSMEs, liquidity scheme and partial credit guarantee scheme 2.0 for NBFCs, extension of the credit linked subsidy scheme (CLSS) scheme till March 2021, structural reforms in growth promising sectors including coal, minerals, defence, airports and aerospace management, power, space sector, atomic energy sector and civil aviation, six months moratorium on term loans, Production Linked Incentive Scheme for 10 champion sectors, income tax relief to developers and home buyers among others, have made recovery sooner than expected, said Shri Sanjay Aggarwal.

Going ahead, demand creation will 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. 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. 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.

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.



Base: 2018-19=100

Sr No Economic Indicators April 20 November 20 Improvement (Nov’20 – Apr’20)
1 IIP Consumer durable goods 5 98 93
2 IIP Consumer non-durable goods 64 124 60
3 IIP Capital Goods 8 86 78
4 IIP Intermediate Goods 39 116 77
5 Coal 97 104 6
6 Crude Oil 86 86 0
7 Natural Gas 86 87 2
8 Petroleum Refinery Products 81 109 27
9 Fertilisers 101 106 5
10 Steel 22 123 101
11 Cement 17 123 106
12 Electricity 88 106 18
13 Consumption of Petroleum products 61 110 52
14 Export Merchandise 50 118 68
15 Export Services 121 125 4
16 India Freight Traffic 98 105 7
17 Credit to Agriculture 104 109 5
18 Credit to Industry 102 99 -2
19 Credit to service sector 111 109 -2
20 Personal Loans 112 110 -2
21 GST Collections 32 105 73
22 SENSEX 112 156 44
23 FDI Equity Inflows 74 210 135
24 External commercial borrowings 54 112 57
25 Unemployment 84 98 13
Composite Weighted Index 78 98 20

Source: PHD Research Bureau, PHDCCI EBM Index

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


Media Division

PHD Chamber of Commerce and Industry