New Delhi (Sputnik): Fear is gripping many investors after the government indicated that it may not provide economic stimulus packages to sectors including the car industry and textiles, which have witnessed subdued demand in recent quarters.
The Indian stock markets slumped to their lowest level in six months on Thursday amid deepening concerns about a slowdown in consumer demand.
The benchmark Bombay Stock Exchange and National Stock Exchange fell by more than 1.5% while the currency fell to 71.98 against the US Dollar, its lowest level in 2019.
India’s Chief Economic Adviser Krishnamurthy Subramanian said it would be a “moral hazard” if the government were to use public money to cushion private losses.
“Countries growing at 5 percent for 10 years had higher investment. We need to focus on investment reforms. Labour law reforms and divestment are areas of focus,” Subramanian told industry leaders , many of whom have been pressing for a fiscal stimulus package.
In the past few weeks, there have been a growing number of reports of a slump in demand and job cuts, ranging from the automotive sector to biscuits and undergarments.
Car manufacturers have witnessed the lowest demand in 20 years and are looking to make as many as one million job cuts.
Parle Products, the country’s largest biscuit maker, warned that it could lay off up to 10,000 workers due to falling demand in the country’s rural heartland while India’s top four underwear makers posted their worst numbers in 10 years.