IHS Markit: PMI signals 15% contraction in Indian economy

The economy contracted at an annual rate of 15 per cent in April.

   
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Novel coronavirus, Covid-19 triggered nationwide lockdown which has impacted the Indian economy at large. India’s industries crashed in wake of the lockdown, signaling a massive contraction in the economy.

The services sector makes up more than half of India’s gross domestic product. However, as per the IHS Markit recent data, the services purchasing managers index plunged by 43.9 points to 5.4 in April, the lowest in the world, hitting single digits for the first time and staying below 50, the dividing line between contraction and expansion.

Meanwhile IHS Markit’s data also indicated that the manufacturing activities at an all time low, the composite index plummeted to 7.2 from 50.6 in March. As per data, historical comparisons of the index with GDP suggests that the economy contracted at an annual rate of 15 per cent in April.

Joe Hayes, an economist at IHS Markit, quoted, “It is clear that the economic damage of the Covid-19 pandemic has so far been deep and far-reaching in India, but the hope is that the economy has endured the worst and things will begin to improve as lockdown measures are gradually lifted.”

The PMI figures provide the first real glimpse of the devastating hit to the economy from the coronavirus pandemic and the nationwide shutdown that came into effect in the last week of March. In fact, zero car sales, suggest Asia’s third-largest economy is on course for a sharp contraction this year. As per reports, about 122 million people lost their jobs in April, many of them daily wage earners.