India's Service Sector Records Five-month Low Due to Coronavirus Outbreak

CIOReviewIndia Team | Monday, 06 April 2020, 13:02 IST

India’s Service Sector Records Five-month Low Due to Coronavirus Outbreak

Indian economy is probably facing the biggest ever crisis since independence due to coronavirus that is impacting economies of countries across the globe, including the US, China, the UK, Italy, Spain, Iran, etc. India’s service sector which is the majorcontributor to the economyexperiencedmassive slowdown in the month of Marchas country is observing 21-day lockdown, shutting down all shops to control coronavirus epidemic.The demand fell sharply in March, andis expected to fall even more due to the on-going lockdown that started on March, 25.

The IHS Markit Services PMI has fallen to 49.3, a five-month low in March from 57.5 in February which is the seven-year high. “Strong growth momentum seen so far in 2019 was halted in March as demand conditions deteriorated, particularly overseas, leading to a reduction in business activity,” saidJoe Hayes, economist at IHS Markit.“Clearly the worse is yet to come as nationwide store closures and prohibitions to leave the house will weigh heavily on the services economy, as has been seen elsewhere in the world. Pressure now fully lies on the government to combat the economic challenges the lockdown will cause,” Hayes added.

As per the report,reduced business activity is the result of weaker consumer demand and fallen orders from the overseas clients. As enterprises in the service sector cut the workforce to balance the operating costsin response to the reduced business requirements, the level of employment has fallen sharply.

The services sector will recover from the slump affected by the coronavirus in the near future, provided large scale support from the governments. Though the situation in India is as not as bad as across the globe, the worst is yet to come, given the random lockdown violations in some parts of the country. However, India seems to combat the epidemic effectively than majority of the countries in the world.

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