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Economic “comeback meter” shows decline in Feb
ECONOMY & POLICY

Economic “comeback meter” shows decline in Feb

The CARE Ratings’ Economic Comeback Meter (CECM) showed that the index score has fallen to 3.23 in February 2021, as compared with 3.71 in the previous month. A higher contraction in fuel consumption from last month and lower corporate bond issuances have been the chief reasons for the decline in the overall index.

The objective of the CECM is to assess how certain high-frequency indicators have fared since June 2020. The aim is to arrive at a score to gauge the recovery path of the Indian economy and quantify the deviation of the present state from the normal. The indicators have been chosen in such a way that it covers three broad aspects or attributes of the economy – production, consumption, and investment.

According to the report, the economy is “on a comeback path” for a sustained period from August 2020. However, the index has fallen to 3.23 in February 2021 compared with 3.71 in the previous month. A higher contraction in fuel consumption from last month and lower corporate bond issuances have been the chief reasons for the decline in the overall index and the economy is still far from a comeback.

CECM tracks nine variables on a monthly basis covering consumption, investment and production. These are bank credit and debt issuances to capture investment, power generation, eway bills and imports to cover production and GST, petrol, 2-3 wheelers and passenger cars to highlight consumption. Comparisons are made on a cumulative basis post June 2020 over the year and preceding months.

The CARE Ratings’ Economic Comeback Meter (CECM) showed that the index score has fallen to 3.23 in February 2021, as compared with 3.71 in the previous month. A higher contraction in fuel consumption from last month and lower corporate bond issuances have been the chief reasons for the decline in the overall index. The objective of the CECM is to assess how certain high-frequency indicators have fared since June 2020. The aim is to arrive at a score to gauge the recovery path of the Indian economy and quantify the deviation of the present state from the normal. The indicators have been chosen in such a way that it covers three broad aspects or attributes of the economy – production, consumption, and investment. According to the report, the economy is “on a comeback path” for a sustained period from August 2020. However, the index has fallen to 3.23 in February 2021 compared with 3.71 in the previous month. A higher contraction in fuel consumption from last month and lower corporate bond issuances have been the chief reasons for the decline in the overall index and the economy is still far from a comeback. CECM tracks nine variables on a monthly basis covering consumption, investment and production. These are bank credit and debt issuances to capture investment, power generation, eway bills and imports to cover production and GST, petrol, 2-3 wheelers and passenger cars to highlight consumption. Comparisons are made on a cumulative basis post June 2020 over the year and preceding months.

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