The ongoing financial woes as well as unprecedented global crisis of the pandemic have unsettled the investment climate across the globe including India. The outbreak of pandemic has added more problem to the already struggling service sector of India where the first fall in the order book volumes since September 2019. However, with the easing of lockdown restrictions across the globe and resumption of activities have indicated a progressive trend but uncertainties are still looming around it and are far from normalization.
Here we would like to present a brief picture of how the service activities in India have struggled with pandemic and presently is on a path or recovery.
- March’20: India’s services sector activities contacted during the month of March as the COVID-19 pandemic dented demand in both national and overseas market, due to the imposition of public health measures for preventing the spread of virus resulting in reduced discretionary spending.
In March HIS Markit Services Purchasing Managers’ Index was at 49.3 in March, down from February’s 85-month high of 57.5, as the new coronavirus pandemic pulled the service sector into contraction. (A reading above 50 on the index indicates expansion while lower than that shows contraction.)
- April’20: The IHS Markit Services Purchasing Managers’ Index plunged to 5.4 in April from 49.3 in March, an unprecedented contraction since the survey first began over 14 years ago. Indicated that India’s services collapsed in April with the coronavirus-led lockdown making the sector come to a complete standstill causing a historic spike in layoffs and fearing for a deep recession.
- May’20: The IHS Markit India Services Business Activity Index was 12.6 in May, up from April’s record low of 5.4. The data was collected from May 12-27 across around 400 service sector companies. These data further asserted that the Business activity across India’s service sector continued to contract in May as Covid-19 led shutdowns impaired business operations, restricted consumer footfall and led to a demand collapse along with job cuts.
- June’20: India’s service sector continued to struggle in June as the country’s coronavirus crisis worsened, even though Services activity picked up pace in June from record lows earlier but continued to show deep contraction for a fourth straight month, as firms reported job losses and business confidence hit an all-time low. The IHS Markit Services PMI for the month of June rose to 33.7 from 12.6 in May.
- July’20: Services firms remained pessimistic with regards to activity over the year ahead for a third consecutive month in July. The IHS Markit Services Business Activity Index was 34.2 in July as against 33.7 in June. Showing that India’s services sector activity shrank for the fifth consecutive month in July even as the pace of contraction slowed last month.
- August’20: Sustained periods of closure and ongoing lockdown restrictions in both domestic and foreign markets have weighed heavily on the health of the industry as August highlights another month of challenging operating conditions in the Indian services sector. Services activity in India contracted for the sixth consecutive month in August though the pace of decline slowed as some firms gradually resumed operations with easing lockdown restrictions. But, The IHS Markit Services Purchasing Managers’ Index increased to 41.8 in August from July’s 34.2 but remained below the 50-mark that separates growth from contraction indicating slow recovery of the sector.
Form the above information it is quite evident that the pandemic situation had worsened an already problematic situation of Indian Service sector. Although the sector is slowing get up to the path of recovery but the it would be immature to conclude that the everything will be rosy in the coming days and we have passed the worst because India has suffered from the largest contraction of nominal GDP, among the major economies of the world, of 23.9 and it will be take time to get back to normal.