Recovery impacted as demand contracts, supply chain disturbed: PHD Chamber

Imposing lockdown in many parts of the country since April have impacted the pace of economic recovery disrupting the supply chains and contraction in demand, says the industry body PHD Chamber of Commerce and Industry in its latest research report.

The report reveals that, out of the 10 economic and business indicators of QET (Quick Economic Trends), only six have performed positive in April 2021 -- GST collections, e-way bills, railway freight, exports, forex reserves, and manufacturing PMI.

Yet, the other four indicators namely passenger vehicle sales, unemployment rate, exchange rate and stock market has registered a decline in April 2021 over the previous month.

Sanjay Aggarwal, President, PHDCCI states that the low base effect, along with strong pace of economic recovery, had created a great hope of double digit growth in 2021-22, although, the pandemic has created emergent signs of slowdown.

According to the report, e-way bills has exposed a highest growth of 583 percent over the corresponding month in previous year on a low base effect of April 2020, followed by GST collections with growth of 338 per cent over the same period.

Sanjay says, "The second wave of Covid-19 has struck like a storm throughout the country, setting new records of daily cases, active cases and deaths. People are channelizing their savings towards the medical expenses of their family members."

The entire economic activity is sternly impacted with the closure of offices and shops. The Pandemic has significantly influenced the buying behaviour of the consumers as many have suspended their larger expenditures such as purchase of vehicles, electronics, among others, he added.

The significant pick up in the economic activity was observed from October 2020 and peaked in January 2021 before declining from February 2021, he adds.

"At this juncture, rapid administration of Covid-19 vaccination becomes crucial to resume the pace of economic momentum," says Sanjay.

Also, there is a need to lower interest rates for consumers and businesses, and for lesser compliances for MSMEs vis-a-vis ease of doing business at the ground level, it added.

A substantial stimulus to create effective strides for futuristic growth trajectory for the Indian economy and for diminishing the daunting impact of the second wave of the pandemic covid-19 on economy, trade and industry would be crucial to support the economic momentum in this extremely difficult time, mentions Sanjay.