Demand and supply may follow jagged patterns this year but both are expected to decline on an aggregate basis. India needs stimulus spending to take effect without further ado With the country under a lockdown for more than 40 days, a crash in economic activity during the period was a given, but hopes of a quick rebound after opening up have been revealed to be more wishful than realistic.
Signs abound of a slump in demand that could outlast the curbs imposed. Consider India’s Purchasing Managers’ Index reading for the manufacturing sector.
From 51.8 in March, when it was barely in expansion territory (above 50), it slipped to 27.4 in April, a level that points to a sharp contraction.