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New Delhi, May 27: India’s fourth recession since Independence, first since liberalisation, and perhaps the worst to date is here, according to rating agency, Crisil.

CRISIL sees the Indian economy shrinking 5 per cent in fiscal 2021 (on-year), because of the Covid-19 pandemic. The first quarter will suffer a staggering 25 per cent contraction.

About 10 per cent of gross domestic product (GDP) in real terms could be permanently lost. "So going back to the growth rates seen before the pandemic is unlikely in the next three fiscals", Crisil said.

Crisil has revised its earlier forecast downwards. "Earlier, on April 28, we had slashed our prediction to 1.8 per cent growth from 3.5 per cent growth. Things have only gone downhill since", it said.

While we expect non-agricultural GDP to contract 6 per cent, agriculture could cushion the blow by growing at 2.5 per cent.

In the past 69 years, India has seen a recession only thrice as per available data in fiscals 1958, 1966 and 1980. The reason was the same each time a monsoon shock that hit agriculture, then a sizeable part of the economy.

"The recession staring at us today is different," it added. For one, agriculture could soften the blow this time by growing near its trend rate, assuming a normal monsoon. Two, the pandemic-induced lockdowns have affected most non-agriculture sectors. And three, the global disruption has upended whatever opportunities India had on the exports front.

Economic conditions have slid precipitously since the April-end forecast of 1.8 per cent GDP growth for fiscal 2021 (baseline), Crisil said.

On the lockdown extension, it said that the government has extended the lockdown four times to deal with the rising number of cases, curtailing economic activity severely (lockdown 4.0 is ending on May 31).

The first quarter of this fiscal will be the worst affected. June is unlikely to see major relaxations as the Covid-19 affliction curve is yet to flatten in India.

"Not only will the first quarter be a washout for the non-agricultural economy, services such as education, and travel and tourism among others, could continue to see a big hit in the quarters to come. Jobs and incomes will see extended losses as these sectors are large employers," Crisil said.

CRISIL also foresees economic activity in states with high Covid-19 cases to suffer prolonged disruption as restrictions could continue longer.

A rough estimate based on a sample of eight states, which contribute over half of India's GDP, shows that their 'red zones' (as per lockdown 3.0) contributed 42 per cent to the state GDP on average regardless of the share of such red zones.

On average, the orange zones contribute 46 per cent, while the green zones where activity is allowed to be close to normal contribute only 12 per cent to state GDP.

The economic costs are higher than earlier expectations, according to Crisil. The economic costs now beginning to show up in the hard numbers are far worse than initial expectations.

Industrial production for March fell by over 16%. The purchasing managers indices for the manufacturing and services sectors were at 27.4 and 5.4, respectively, in April, implying extraordinary contraction. That compares with 51.8 and 49.3, respectively, in March.

Exports contracted 60.3 per cent in April, and new telecom subscribers declined 35 per cent, while railway freight movement plunged 35 per cent on-year.

"Indeed, given one of the most stringent lockdowns in the world, April could well be the worst performing month for India this fiscal," it said.

Added to that is the economic package without enough muscle. The government recently announced a Rs 20.9 lakh crore economic relief package to support the economy. The package has some short-term measures to cushion the economy, but sets its sights majorly on reforms, most of which will have payoffs only over the medium term.

"We estimate the fiscal cost of this package at 1.2 per cent of GDP, which is lower than what we had assumed in our earlier estimate (when we foresaw a growth in GDP)," it said.

"We believe a catch-up to the pre-crisis trend level of GDP growth will not be possible in the next three fiscals despite policy support. Under the base case, we estimate a 10 per cent permanent loss to real GDP (from the decadal-trend level), assuming average growth of about 7 per cent between fiscals 2022 and 2024," Crisil said.

Interestingly, after the Global Financial Crisis (GFC), a sharp growth spurt helped catch up with the trend within two years. GDP grew 8.2 per cent on average in the two fiscals following the GFC. Massive fiscal spending, monetary easing and swift global recovery played a role in a V-shaped recovery.

To catch-up would require average GDP growth to surge to 11 per cent over the next three fiscals, something that has never happened before.

The research said that successive lockdowns have a non-linear and multiplicative effect on the economy a two-month lockdown will be more than twice as debilitating as a one-month imposition, as buffers keep eroding.

Partial relaxations continue to be a hindrance to supply chains, transportation and logistics. Hence, unless the entire supply chain is unlocked, the impact of improved economic activity will be subdued.

Therefore, despite the stringency of lockdown easing a tad in the third and the fourth phases, their negative impact on GDP is expected to massively outweigh the benefits from mild fiscal support and low crude oil prices, especially in the April-June quarter. "Consequently, we expect the current quarter's GDP to shrink 25 per cent on-year," it said.

Counting lockdown 4.0, Indians have had 68 days of confinement. S&P Global estimates that one month of lockdown shaves 3 per cent off annual GDP on average across Asia-Pacific.

Since India's lockdown has been the most stringent in Asia, the impact on economic growth will be correspondingly larger.

Google's Community Mobility Reports show a sharp fall in movement of people to places of recreation, retail shops, public transport and workplace travel. While data for May shows some improvement in India, mobility trends are much below the average or baseline, and lower compared with countries such as the US, South Korea, Brazil and Indonesia.

Jeddah, Jan 3: Spanish driver Fernando Alonso is aiming to create history as the first Formula One world champion to win the Dakar Rally when the 12-day marathon gets underway in Saudi Arabia on Sunday.

Alonso, who won the F1 championship with Renault in 2005 and 2006, is one of 351 starters in this year's 7,500 km race which has moved from South America to Saudi Arabia, both venues a long way from the original 1979 route between Paris and the Senegalese capital Dakar.

Among the starters will be motorbikes, quad bikes and trucks but Alonso, who will have five-time bike champion Marc Coma navigating his Toyota, will be in the car category as he bids to become one of the greatest all-round drivers of all time.

Apart from his success in F1, the 38-year-old Spaniard has also won the Le Mans 24-hour race and has singled out the Indianapolis 500 as his priority for 2020. He describes Dakar as “the biggest challenge of my career”.

Alonso is not the first F1 driver to take part in the race, however.

The Belgian Jacky Ickx, a winner of eight grand prix and six-time winner of Le Mans, won Dakar in 1983 and came second in 1986 and 1989. Frenchman Patrick Tambay, who had two wins in his 114 grand prix, came third in 1988 and 1989.

Given the treacherous conditions--long stretches of sand dunes--Alonso is not overly confident of challenging for victory, noting that even the nine-time world rally champion Sebastien Loeb was unable to deliver when he raced the Dakar. Loeb won 13 stages but could only finish second in 2017 and third in 2019.

“If Loeb still hasn't won the Dakar, imagine me, who is coming from asphalt,” Alonso told RTVE. “I think the goal is more to approach the rally as an enriching experience for us.”

Fellow Toyota driver Nasser Al-Attiyah is a more likely candidate, not least because the Qatari is a three-time winner and reigning champion.

"Give me some sand and I'm happy," Al-Attiyah told dakar.com.

He will be pressed, however, by the Minis of Carlos Sainz and 'Monsieur Dakar' aka Stephane Peterhansel who has won 13 Dakars across bikes and cars in 30 races.

“We are obviously very excited about the Dakar in Saudi Arabia. It will be a new challenge for everyone,” said Peterhansel who will be partnered by Paulo Fiuza after the Frenchman's wife Andrea pulled out for health reasons.

“Unfortunately, it is not possible to contest the rally with Andrea, as was planned, however I have known Paulo Fiuza for a very long time. According to the organisers, the navigation will be very complicated and play a major role this time.”

Cyril Despres, a five-time winner on bikes, is also back with a new teammate -- explorer Mike Horn.

“I was stuck in the ice for a month, and now I'm heading to Jeddah. For the first time, the Dakar Rally is in Saudi Arabia and I'm doing it with a very good friend of mine, Cyril Despres,” tweeted Horn whose adventures include an 18-month solo journey around the equator without using any motorised transport.

Horn is also the first man to travel without dogs or transport to the North Pole during winter, in permanent darkness.

Across the dunes of Saudi Arabia that experience may come in handy.