NEW DELHI: India’s eight infrastructure sectors contracted sharply for the third month in a row in May, though lower than the record dip in April, with only fertilizer production registering positive growth.
In May, the core sector data released by the industry department showed output shrank 23.4% compared to 37% in April, mostly due to large decline in steel (48.4%), cement (22.2), electricity (15.6) and refinery products (21.3%).
The manufacturing Purchasing Manager’s Index (PMI) released by IHS Markit earlier this month stood at 30.8 in May, slightly better than 27.4 recorded in April but still well below the 50 mark that divides contraction from expansion.
Prime Minister Narendra Modi and chairman of the 15th Finance Commission NK Singh have said that multiple green shoots of recovery are visible in the economy from fertilizer production numbers, auto sales and robust employment print.
Maruti Suzuki India Ltd (MSIL), the country’s largest carmaker, reported sales of 18,539 vehicles in May after failing to sell a single unit in the preceding month. The company restarted production in a phased manner at two of its units last month after the government eased lockdown curbs. Unemployment rate has fallen sharply in recent weeks, coming close to the pre-lockdown weeks, according to Centre for Monitoring Indian Economy data.
The International Monetary Fund on Wednesday projected the Indian economy to contract 4.5% in FY21 against its earlier growth estimate of 1.9%. S&P Global Ratings on Friday said the permanent loss in output due to the covid-19 pandemic to be the highest in India in the Asia Pacific region at 10.9%. “India’s economy is in deep trouble. Difficulties in containing the virus, an anaemic policy response, and underlying vulnerabilities, especially across the financial sector, are leading us to expect growth to fall by 5% this fiscal year before rebounding in 2021," it said.