Businesses have been brought to a state of distressing decline due to persisting lockdowns in several states, leading to the economy to dip to levels previously seen in June last year, a Japanese brokerage said on Monday.

Nomura used a proprietary index of gauging activity deployed since the national lockdown last year to confirm that the worst hit to the activity will occur in May. However, it was quick to note that a sequential improvement will follow in June.

"Lockdowns look to spill into June, but a few states are announcing a slow rollback of restrictions as their virus caseloads fall, which suggests a sequential improvement in activity in June," the brokerage said.

The business resumption index slipped to 60 for the week ended May 23, down from 63 in the previous reporting week, it said, adding that these levels were last seen in June 2020.

It reported the hit that both mobility and non-mobility sectors have suffered, pointing out that Google's workplace and retail and recreation mobility indices fell by 5-6 percentage points. The Apple driving index flattened and rose by 3.4 percentage points, the brokerage said.

Power demand insisted on declining, down by 5 per cent, while the labour participation rate moderated to 39.4 per cent from 40.5 per cent. The unemployment rate rose to 14.7 per cent from 14.4 per cent last week, near its one-year high.

The pace of vaccination needs to pick up for a sustained recovery, which is expected to happen only after June.

Meanwhile, analysts at Kotak Institutional Equities said they see "first sights of green shoots" in the economy, brought about by the second round of coronavirus infections.

"Most metrics show a significant decline but we could be at the trough of economic activity," they said.

Mobility metrics, trending downwards across India, have started to look encouraging in Mumbai and Pune. Mumbai and Pune were two of the first cities to peak in the second wave.

Stating that most states have "peaked" in terms of infections, the analysts also determined the slow pace of vaccinations an area of concern.