New Delhi, May 13 -- The Covid-19 pandemic shrunk India's manufacturing output by almost 10% in 2020-21. This makes 2020-21 the biggest shock to manufacturing activity since 1982-83, the earliest period for which Index of Industrial Production (IIP) data is available.

To be sure, the headline annual IIP number hides the complete collapse in industrial activity due to the 68-day long complete lockdown which was imposed on March 25, 2020, and a subsequent, even though patchy recovery.

Though the March IIP numbers, which were released on Wednesday, have a strong base-effect, they suggest that it might have been a good month for the economy. Retail inflation data for April, however, suggests that the headwinds to rural demand might create add...