NEW DELHI, 24 February, 2021 (TON): On Tuesday, ICRA (formerly Investment Information and Credit Rating Agency of India Limited) said that India's economic recovery has entered into a consolidation phase in January 2021.

The agency said after the broad-based improvement seen in December 2020, the year-on-year (YoY) performance of a majority of the early available economic indicators recorded a loss of momentum in January 2021, relative to the previous month.

"A majority of this lost steam in January 2021, relative to December 2020, partly because of an unfavorable base effect, supply-side issues and price hikes, marking a contrast to the improvement in sentiment brought on by the rollout of the Covid-19 vaccines," ICRA's Principal Economist Aditi Nayar said.

"We do not construe the dip in volume performance of a majority of the lead indicators in January 2021 as a sign of alarm regarding the sustainability of the growth recovery. However, we do caution that the pace of underlying growth in the Indian economy remains subdued, and do not foresee a sharp ramp-up in the pace of GDP expansion in Q4 FY2021."

"This sub-set includes the output of the passenger vehicles (PVs), motorcycles and Coal India Ltd (CIL), vehicle registrations, petrol consumption, and ports cargo traffic, generation of GST e-way bills, bank credit, and deposits."

The agency was of the view that this was led by a combination of factors such as the fading of the favorable base effect, supply-side issues, and price hikes.