A private survey result released on Wednesday reveals that India’s services collapsed in April.
The IHS Markit Services Purchasing Managers’ Index was 5.4 in April. It was 49.3 in March. It has witnessed an unprecedented contraction since the survey first began over 14 years ago.
The corona virus-led lockdown has made the sector come to a complete standstill. It has caused a historic spike in layoffs. It has reinforced fears of a deep recession.
Joe Hayes, an economist at IHS Markit, highlighted the economic damage of the Covid-19 pandemic. He said that the effects have so far been deep and far-reaching in India. Hayes states that India’s economy contracted at an annual rate of 15% in April. It has been suggested by the historical comparisons with GDP data.
He further stated that during April, the Indian services economy posted its worst-ever month-on-month drop in business activity. The extreme slide in the headline index fell by over 40 points. It shows that the strict lockdown measures have led to the sector essentially grinding to a complete standstill.
The rate of job shedding was a survey record. Approximately 90% of respondents reported unchanged workforce numbers. The expectations towards future output slumped for a second successive month to their weakest since December 2015.
The survey report suggests that the index measuring foreign demand for services ceased to an unprecedented 0.0. The overall demand index also fell to a record low.
The composite PMI sank to an all-time low of 7.2 last month. It was obtained by putting together with services activity. In March it was 50.6.
For the month of April, the data was collected from April 7-28. To combat the Covid-19 threat, India’s nationwide 21-day lockdown was imposed on March 25. It was first extended to May 3 and again till May 17.
A sister survey was also released on Monday. It showed that factory activity contracted at its sharpest rate ever.
However, Hayes said, the hope is that the economy has endured the worst. As the lockdown measures are gradually lifted, things will begin to improve.