India's factory output plummets to a 7-month low in March

Due to the renewed lockdowns to control the resurgence of COVID-19 cases, India's manufacturing factory output grew at its weakest in seven months in March 2021. The seasonally adjusted IHS Markit India Manufacturing Purchasing Managers' Index (PMI) fell from 57.5 in February to a seven-month low of 55.4 in March but remained above the 50-level separating growth from contraction for an eighth straight month.

Lockdown-like restrictions result in hindering the supply of goods to other states from where the goods are being manufactured. This has also resulted in an increase in the unemployment level in March 2021, marking a year of job losses. The rate of contraction was the quickest since September 2020, but modest.

This is a clear indication of a slowdown in the manufacturing industry due to new lockdown guidelines on account of a fresh surge in COVID-19 cases in many states with Maharashtra contributing the highest number of cases. If predictions are to be believed, the situation is set to get worse and challenging in April.

The PMI data says that employment has seen a sharp fall in March this year. Survey results show that the decline has resulted from fresh restrictions related to the workforce which migrated from one state to another in search of daily bread.

Another unforeseen situation that has arisen out of recent pandemic advancement is the sharp increase in the average cost of goods and services in March. The inflation rate was the second strongest in under three years due to the rise in prices of rubber, textile, plastic, chemicals and metal. Consumer sentiment seems to be hit worst.