With India in lockdown to fight the spread of coronavirus, almost every sector of the economy had been affected. According to data firm IHS Markit, the country’s manufacturing sector is showing signs of weakness, but is relatively better off than those of other nations.
In its monthly survey, the IHS Markit’s Purchasing Managers’ Index fell to 51.8 in March, from 54.5 in February, signaling the slowest improvement in business conditions since November 2019. If the index is above 50 it means expansion, while a score below that denotes contraction.
This was the 32nd consecutive month the manufacturing index has remained above 50. But confidence regarding the business outlook has plummeted to a record low, with positivity tapered by Covid-19 concerns, the survey said.
IHS Markit economist Eliot Kerr said: “The Indian manufacturing sector remained relatively sheltered from the negative impact of the global coronavirus outbreak in March. However, there were pockets of disruption and a clear onset of fear among firms.”
Kerr warned, however, that if the number of confirmed coronavirus cases continued to rise at the same rate, the Indian manufacturing sector could be adversely affected, the Press Trust of India reported.
In March, India’s manufacturing sector was hampered by softer rises in new business as international demand faltered owing to the coronavirus pandemic. The report pointed out that the decline in international sales was the fastest since September 2013.
“The most prominent signs of trouble came from the new export orders and future activity indices, which respectively indicated tumbling global demand and softening domestic confidence,” Kerr noted.
IHS Markit compiles the manufacturing index based on the responses to questionnaires it sends to purchasing managers in a panel of about 400 manufacturers. The panel is classified on the basis of sector, workforce size and contributions to GDP.
Last week, Moody’s Investors Service slashed India’s economic growth projection for 2020 from 5.3% to 2.5%, in the wake of disruptions caused by Covid-19 to the global economy. The rating agency noted India’s credit flow to the economy was already under strain because of severe liquidity constraints in the bank and non-bank financial sectors.
Reserve Bank of India governor Shaktikanta Das had also noted that because of the pandemic’s impact the country’s economy may miss the earlier estimates forecast by the National Statistics Office. It had expected gross domestic product to grow 4.7% for the January-March quarter and annual growth to touch 5%.
The governor felt that many sectors of the economy would be hit if the Covid-19 pandemic’s intensity remains high for a long duration accompanied by lockdowns. He also warned that a global slowdown would adversely affect India.
Meanwhile, the confirmed cases of coronavirus in India have now crossed 2,000 and the death toll has topped 50. To contain the pandemic, India is going through a 21-day lockdown which will come to an end by April 15.
Road transport, train services and flights have been suspended and many factories have shut down to prevent large numbers of people gathering. Several technology firms have told their employees to work from home.