The rate of decline in the output of core segments of the economy has been arrested significantly in July, industry chamber Assocham said on Monday.
India's economy had contracted 23.9 per cent in the April-June quarter, hit by the coronavirus-induced lockdowns.
According to an analysis by Assocham, cement, steel and coal, which suffered heavy declines in the first quarter, recovered significantly in July 2020, even though the annualised numbers reflect contraction.
"Within the broader index of industrial production, manufacturing has the largest of the weight. Having fallen off the cliff by 40.7 per cent during the April-June quarter, it is likely to witness a rebound when July IIP data is released. However, turnaround to positive growth trajectory could be some time away," Assocham said.
After a contraction of 15 per cent in Q1 of 2020-21 over the same quarter in the previous fiscal, coal production dropped at a much lesser pace of 5.7 per cent in July, it said.
Likewise, cement output in July dropped by 13.5 per cent in the month after witnessing a sharp contraction of 38.3 per cent in April-June.
"Even as we are waging an unprecedented war against Covid-19 to safeguard human lives and making best possible efforts to minimise the economic impact, key sectors of the economy are responding well to the new normal.
"Whether it is a factory shop floor workman or an office-goer, or a CEO, they are finding ways to cope up with the new reality. Steady restoration of confidence should help, going forward," Assocham secretary general Deepak Sood said.
Fall in steel output too has been arrested to 16.4 per cent in July, after a drop of 56.8 per cent for the April-June period, the chamber said.
The Assocham analysis, however, takes production and consumption at the same level due to absence of data about the possible inventory.
"Things are surely challenging, but certainly not alarming and we will reshape quite well. This is not to under-estimate the unknowns about the pandemic. We hope a break-through in vaccine is achieved sooner than later," Sood added.
Other vital sectors of the economy like electricity and construction too are expected to restore much of their lost traction, Assocham said.
The chamber believes that agriculture and allied sector, which remains the bright spot in the challenging times, is likely to retain the positive trajectory, thus boosting segments like tractors, chemicals, fertiliser, two-wheelers and non-discretionary consumption.