Fall in demand in the Indian economy has taken a toll on the power sector, shrinking electricity demand for the third straight month in October. The power requirement started to fall in August after more than two years. A widespread slump in demand in major sectors such as consumer goods, auto, and real estate has led to a decline of 13.2 per cent in the country’s power requirement, reported Bloomberg citing CEA data. Low demand has also pulled down India’s manufacturing PMI to a two year low in October, adversely affecting the power consumption.
Along with electricity, the slowdown has also hit the monthly consumption of diesel and petrol. The consumption of petroleum fuel has been declining since June and hit the lowest level since the start of 2017 in September.
The data has come at a time when Moody’s Investors Service has cut India’s credit rating outlook to negative from stable, citing a slowing economy and rising public debt. Fall in electricity demand further indicates the depth of slowdown in India and the gloomy short-term outlook.
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The government has recently announced many measures to provide fiscal stimulus to give cushion to the sagging economy, but the revival is yet to be seen. In the latest move, Finance Minister Nirmala Sitharaman announced a special window to finish the incomplete houses, to boost the real estate sector. Similarly, the government has slashed corporate tax cut, recapitalised banks and housing finance companies, and linked repo rate to bank loans, in order to boost investment.
However, the GDP growth forecast for the second quarter is also tepid, indicating a slow recovery in sectors like power and manufacturing in the near-term.
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Source: Financial Express