Indian Manufacturing rates dip in Lock Down first time in a decade
Indian manufacturing industry has been hit severely after the corona virus lockdown hit. According to data compiled by IHS Markit recently, the India Manufacturing Purchasing Managers’ Index (PMI) recorded a fall to 27.4 in April from 51.8 in March 2020, keeping in mind seasonally adjustments. It is worth noting that a reading of less than 50 indicates contraction in business activity.
This is the sharpest and most steep decrease in the last 15 years to be reported in India. New orders also seem to have fallen hugely for the first time in the last two and half years, according to the report.
Unfortunately, cut in production has also meant a severe cut in jobs since April 2020. Both input costs and output prices have been dramatically reduced as well. Producers are now willing to sell at lower prices, just to ensure that they can acquire orders and keep money in circulation.
Manufacturing industry worldwide has been severely affected. A fall in manufacturing PMI of in India has been mirrored across economies in Asia and globally. But the fall in India is the lowest in the region.
Economies such as the United States have also slipped exhibiting dangerous trends of manufacturing slipping into contraction zone in March itself and a further fall in April 2020.
In Asia, too, PMI readings continued to fall. Economists forecast that “Though the month of May might see some improvement, as restrictions have been eased in many parts of the country, we continue to see subdued economic growth. The RBI’s Monetary Policy Committee will reduce the repo rate by another 90 basis points by the August policy meeting.”