Industry body FICCI has urged for introduction of direct income support measures to boost demand in the country, which has gone down since households have curbed their spending owing to the ongoing Corona virus infection.
"We feel that there is an urgent need for boosting demand through direct income support measures. Focus on urban poor, security cover for micro, small and medium enterprises and other high contact-based services will be critical,” FICCI President Uday Shankar said.
He said that unlike last time, when households fell back on their savings and helped in quick economic recovery with pent-up demand, this time, savings are depleted as health expenditure has been quite high.
Though industrial production has not been affected by supply side issues like it was during the first wave of the pandemic, domestic demand has fallen during the ongoing second wave.
GDP for the fourth quarter of FY21 grew by 1.6 percent, up from the 0.5 percent growth in the third quarter and 7.4 percent contraction in the second quarter.
Experts have noted that the raging pandemic has severely hit domestic spending across the country, and it will take a long time to come back on track.
“We must note that the sharp economic turnaround that India was witnessing earlier this year has been suddenly interrupted due to the devastating second wave of the Covid-19. FICCI is particularly concerned about the spread of the second wave to the rural areas and smaller towns. Almost all the lead recovery indicators have been undermined once again over the past few weeks,” Mr Shankar said.
Earlier in the day manufacturing PMI data was released, which had showed that manufacturing activity hit a 10-month low in May 2021, due to the fast spreading second wave of the Corona virus infection and the resultant restrictions had adversely affected factory activities.