PM Modi celebrates Diwali with troops along LoC in J&K's Gurez

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.

New Delhi, Jul 11: India's COVID-19 case count crossed the eight lakh-mark on Saturday with yet another highest single-day spike of 27,114 new cases in the last 24 hours.

As many as 519 deaths were reported during this period.

The total number of positive cases in the country stands at 8,20,916, including 2,83,407 active cases, 5,15,386 cured/discharged/migrated and 22,123 deaths, according to the Ministry of Health and Family Welfare.

With as many as 2,38,461 COVID-19 cases, Maharashtra continues to remain the worst-affected state, followed by Tamil Nadu (1,30,261) and Delhi (1,09,140).

Meanwhile, 1,13,07,002 samples have been tested for COVID-19 till July 10. Out of these 2,82,511 samples were tested yesterday, according to the Indian Council of Medical Research (ICMR).

Jun 4: Mahatma Gandhi’s statue outside the Indian Embassy in Washington DC was vandalised with graffiti and spray painting by unknown persons allegedly involved in the ongoing protests in the US against the custodial killing of African-American George Floyd.

This has prompted the mission officials to register a complaint with the local law enforcement agencies.

The incident is reported to have taken place on the intervening night of June 2 and 3 in Washington DC.

The Indian embassy has informed the State Department and registered a complaint with local law enforcement agencies, which are now conducting an investigation into the incident.

On Wednesday, a team of officials from Metropolitan Police in consultation with the Diplomatic Security Service and National Park Police visited the site and are conducting inquiries.

Efforts are on to clean up the site at the earliest.

Vandalism of the statue of the apostle of peace comes during the week of nationwide protests against the custodial killing of African-American George Floyd in Minneapolis on May 25.

Several of these protests have turned violent which many times has resulted in damage of some of the most prestigious and sacred American monuments.

In Washington DC, protestors this week burnt a historic church and damaged some of the prime properties and historic places like the national monument and Lincoln Memorial.

One of the few statues of a foreign leader on a federal land in Washington DC, the statue of Mahatma Gandhi was dedicated by the then Prime Minister Atal Bihari Vajpayee, in the presence of the then US president Bill Clinton on September 16, 2000, during his state visit to the US.

In October 1998, the US Congress had authorised the government of India to establish and maintain a memorial “to honour Mahatma Gandhi on Federal land in the District of Columbia."

According to the Indian Embassy website, the sculpture of Mahatma Gandhi is cast in bronze as a statue to a height of 8 feet 8 inches. It shows Gandhi in stride, as a leader and man of action evoking memories of his 1930 protest march against salt-tax, and the many padyatras (long marches) he undertook throughout the length and breadth of the Indian sub-continent.

The statue, the design of which was created by Gautam Pal, is a gift from the Indian Council for Cultural Relations (ICCR). The pedestal for the statue of Mahatma Gandhi is a block of new Imperial Red also known as Ruby Red a block originally weighing 25 tonnes reduced to a size of 9'x7'x3'4". It now weighs 16 tonnes.