With the second wave of the Covid pandemic and renewed lockdowns impacting domestic demand and production, India’s manufacturing activity in March grew at its weakest pace in seven months, forcing companies to cut workforce again, showed a private survey.
The Nikkei Manufacturing Purchasing Managers’ Index (PMI) compiled by IHS Markit fell to 55.4 in March from 57.5 in February. A reading above 50 denotes growth and one below that indicates contraction.
“Survey participants indicated that demand growth was constrained by the escalation of the Covid-19 pandemic, while the rise in input buying was curtailed by an intensification of cost pressures,” said Pollyanna De Lima, economics associate director at IHS Markit.
The data came ahead of the monetary policy review on Wednesday by the Reserve Bank of India, which is widely expected to maintain a status quo in interest rates amid uncertainty posed by the pandemic’s second wave but may revise inflation projections upward for the year.
The government, however, said having successfully managed the first wave of the pandemic, India is well prepared to combat the scourge of the second wave.
“The economy is poised to build back better and stronger as is reflected in the movement of several high-frequency indicators. Instrumental in this resilient comeback will be a strong revival in investment growth supported by the AtmaNirbharBharat Mission and a massive boost to infrastructure and capital expenditure provided for in the Union Budget 2021-22,” the finance ministry said in a report.
Ahead of the release of the PMI data, the February numbers from eight key infrastructure sectors too showed a contraction of 4.6%.
The IHS Markit survey said with Covid-19 restrictions expanded and lockdown measures re-introduced in many states, Indian manufacturers look set to experience a challenging month in April.