Inflation | V-shaped recovery in manufacturing sector led by iron & steel, cement, pharma and auto cos: Economic Surve
MUMBAI: Demand conditions in the manufacturing sector is on a path of recovery led by iron and steel, food products, cement, automobile and pharmaceutical companies, India’s 2020-2021 economic survey said.
“V-shaped recovery is well underway, as demonstrated by the recovery in GDP growth and the sustained resurgence in high frequency indicators such as power demand, E-way bills, GST collection, steel consumption,” the survey said.
“PMI Manufacturing, however, continued to remain in an expansionary zone in December 2020. Resuscitating steel consumption reinforced acceleration in the construction sector, propping up employment as the economy unlocked,” said the economic survey.
PMI Manufacturing or the Purchasing Managers’ Index (PMI) is a measure of the economic trends in the manufacturing and service sectors of a country.
A palpable V-shaped recovery in industrial production was observed over the year. Manufacturing rebounded and industrial value started to normalise, said the survey.
According to the survey, the manufacturing sector recorded a growth of 0.5 % in the second half against a contraction of 19.4% in the first half. Electricity and Construction sectors are also estimated to register V-shaped recovery with growth of 7.1% and 4.4 % respectively
“Trade, Hotels, Transport & Communication, constituting one-third of overall services, contracted by 31.5% in the first half and are estimated to contract by 12.0% in the second half,” the survey added.
The index of eight core industries, namely coal, natural gas, fertilizers, cement, crude oil, petroleum , steel and electricity which make up around 40% of the index, registered a de-growth of 2.6% in November 2020 as compared to a growth of 0.7% in November, 2019 and negative 0.9% in October, 2020.
The housing market, a key forward linkage sector for steel consumption, saw gradual resurgence from its Q1 of 2020-21 trough, the report added.
While the export of Iron and steel products increased from 3% to 4.4% and was among the top 10 products to be exported in April-Nov 2020 period, automobile fell out of the top 10 commodities being exported from India during FY21 as the pandemic hit global demand, the centre found in Economic Survey 2020.
However, the survey added that domestic demand for automobiles recorded a sharp recovery during the Diwali period.
As per the survey, global trade is projected to contract by 9.2 % in 2020, comparable to the decline during the 2009 global recession but affecting a markedly larger share of economies.
“Trade has, however, played a critical role in responding to the pandemic, allowing countries to secure access to vital food and medical supplies,” the survey said.
In Video: Economic Survey 2020-21: V-shaped recovery due to timely and stringent lockdown, says CEA KV Subramanian