India is one of the countries most affected in the world in the coronavirus pandemic, with reported cases of a surge in recent weeks when the country emerged from a strict national block.
Together, India has reported more than 400,000 infections since January. Although in relation to the population, the percentage of infected people is still low. India also says that the number of people recovered is higher than those currently infected with the virus.
The closure of the country began in late March and was subsequently extended several times. Severe restrictions stopped most types of economic activity and led to the fact that millions of people, many of whom received daily wages, lost their jobs and income streams.
Goldman Sachs Investment Bank Last Month Predicted Massive 45% Economic a decline of three months from April to June. Moody’s rating agency downgraded India’s credit ratings to the lowest level of investment.
According to Priyanka Kishore, head of the Indian and Southeast Asian economics department at Oxford Economics, Priyanka Kishore, head of the Indian and Southeast Asian economies, is trying to restore the recovery path of India. She also said that India’s fiscal policy response was “rather meager” compared to the tight restriction.
To mitigate the economic impact, Prime Minister Narendra Modi’s government announced a $ 266 billion support package containing both fiscal and monetary measures, which are said to cost about 10% of India’s GDP.
But economists say that this package does little to stimulate growth, since it includes very few planned government spending, and the benefits of several measures are expected only in the medium term.
Although the impact on India’s gross domestic product in the current quarter will not be known for several more months, the graphs below show a snapshot of how economic activity was hampered during the blockade.
Industrial production in India plummeted in April, when the country was blocked and most plants did not work. The index decreased by 55.5% compared to the same period a year earlier. This includes sectors such as mining, manufacturing and electricity. The production of consumer durables fell sharply in a month.
The government said most industrial enterprises did not report output in April.
“Therefore, it is inappropriate to compare the IIP of April 2020 with previous months,” the statement of the Ministry of Statistics and Program Implementation said. data release earlier this monthWe add that the information will be “reviewed” in the coming months.
May data will be published in July.
Business activity and new orders
The service sector collapsed in April, as most businesses were closed due to blockages. A private survey by IHS Markit showed an “extreme decline” in activity. The index of business activity in the services sector, compiled by the company, turned out to be at a shocking level of 5.4, which is much lower than the industry forecast of about 40. A reading above 50 indicates expansion, while indicators below this level represent a decrease.
Business activity in the service sector also plummeted in May as a pandemic hindered operations, reduced the number of stores, and led to lower demand. Last month number was 12.6 and IHS Markit in its report notes that the survey data “continues to indicate a sharp decline in output and new orders by month.” The domestic tourism and tourism sectors also declined sharply, which contributed to a decrease in business activity in the service sector.
This month, IHS Markit pointed to the automotive sector in India in a separate note. Production was mostly closed in April before blocking conditions began to improve gradually. Referring to the Society of Indian Automakers, the note indicated that the automaker’s daily turnover for each closing day was about $ 300 million per day.
One of India’s most profitable assets is its vast consumer base. But people were less optimistic about their current situation and future expectations.
The data of the Reserve Bank of India showed that consumer confidence collapsed last month. The current situation index and the index of future expectations were below 100, indicating consumer pessimism. A reading above 100 represents optimism.
“Consumer perceptions about the general economic situation, the employment scenario and household incomes are sinking deeper into the contraction zone,” RBI said in its release, “Although the expectations regarding the general economic situation and the employment scenario for the coming year were also pessimistic.”
The May survey was conducted through telephone surveys of 5300 households in 13 major cities of the country.
Data, unofficial data, and media reports all suggest that millions of people in India have lost their jobs due to blockages. Experts believe this will disproportionately affect daily wage earners and low-income households.
Information collected by the Indian Economy Monitoring Center showed that the unemployment rate in rural and urban areas rose sharply at the end of March. It remained relatively high in April before signs of improvement began, starting in May, when some activities resumed.
The CMIE said unemployment “is witnessing a very rapid fall” in June, followed by an increase in labor force participation.
At the national level, India publishes a periodic labor force survey over 12-month periods. In the latest data published for the fiscal year 2018-2019, the data showed that the unemployment rate fell to 5.8% from more than the four-year high of the previous year. The media reported that,
The impact of blockages on employment in India is likely to be reflected in the next survey, which will not be published until next year.