New Delhi, January 2: Cash-strapped Indian economy saw one of its worse phases, as Manufacturing sector contracted instead of growing for the first time in 2016 revealed a private survey on Monday.
The Nikkei India Manufacturing Purchasing Managers’ Index fell to 49.6 in December from November’s 52.3. A reading above 50 mark indicates economic expansion, while below 50 mark it points toward contraction.
As per the report: PMI data for December indicated that the rupee demonetisation took a toll on manufacturing performance…Cash shortages and lower workplace activity resulted in job shedding and falling buying levels during December.
Government’s demonetisation of Rs 500 and Rs 1000 notes is looked after as the prime reason for downturn, as cash shortages in the economy reportedly resulted in fewer levels of new orders besides delay in meeting the current ones.
“With the window for exchanging notes having closed at the end of December, January data will be key in showing whether the sector will see a quick rebound,” said Pollyanna De Lima, Economist at IHS Markit and author of the report.