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The worst may be behind us

  • Uncertainty over the economy is not over, given the covid crisis, but there are indications that things will not get any worse

At a time when everything including data collection for government statistics has become difficult, any numbers that offer a glimpse of India’s economic performance need scrutiny. On Tuesday, the government reported a 23.4% decline in the output of India’s eight key infrastructure industries in May from a year earlier. This compares with a 37% decline in April. Barring crude oil, which slumped further, all other sectors showed signs of having bottomed out.

Industrial production numbers, when released, will perhaps give a better sense of how our factories are doing. Yet, it does seem from the smaller contraction in core output that the economy can’t get worse. A recovery, of course, is likely to be slow and painful, but it’s a relief that distress may begin easing from now onwards. Indeed, with the lockdown gradually being lifted in most parts of the country, business activity should begin to revive.

A revival should gain strength as migrants who had returned to their villages during the lockdown start getting back to work. Reports have started to emerge that some labourers are returning to cities. Their numbers may be small, yet it does suggest some semblance of normalization. As their numbers rise, the labour shortages that ail businesses presently would also begin to ease. For a broader recovery, we may need various other indicators to turn around. So long as the pandemic isn’t over and infections are still on the rise, uncertainty will remain. But for now, we must build on every little bit of positive news.

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