PM Modi says, India will always support Palestine; bats for dialogue with Israel

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, Dec 24: The Delhi Police said that a head constable was killed during clashes over the Citizenship Amendment Act (CAA) in northeast Delhi today.

Deputy Commissioner of Police, Shahdara, Amit Sharma was also injured during clashes, a senior official said. Sharma suffered injuries to his head and hand. He was hospitalised and is doing fine, the official added.

Tension escalated in northeast Delhi with protesters torching at least two houses and a fire tender in the Jaffrabad and Maujpur areas, where pro and anti-CAA groups clashed for the second consecutive day on Monday and hurled stones at each other.

Violence was also reported from the Chandbagh area in Jaffrabad.

Police fired tear gas shells and also resorted to lathicharge to disperse the protesters.

According to officials, a fire tender was damaged by the protesters after it responded to a fire call in the area.

The Delhi Metro closed entry and exit at the Jaffrabad and Maujpur-Babarpur stations as an uneasy calm prevailed in the area.

"Entry & exit of Jaffrabad and Maujpur-Babarpur are closed. Trains will not be halting at these stations," the Delhi Metro Rail Corporation (DMRC) said in a tweet.

Entry and exit were closed at the Jaffrabad metro station for over 24 hours.

Clashes broke out on Sunday evening between pro and anti-CAA groups near Jaffrabad after a large number of people protesting against the Citizenship (Amendment) Act (CAA) blocked a road, while similar sit-ins were launched in several other parts of the national capital.

Delhi chief minister Arvind Kejriwal has urged lieutenant governor of Delhi and the Union home minister to restore order.

Nobody should be allowed to orchestrate violence, he said.

Delhi Lt Governor Anil Baijal instructed the police commissioner to maintain law and order in the national capital in the wake of violence.

"Instructed @DelhiPolice and @CPDelhi to ensure that law and order is maintained in North East Delhi. The situation is being closely monitored. I urge everyone to exercise restraint for maintenance of peace and harmony," Baijal tweeted.

Delhi minister and Babarpur MLA Gopal Rai on Monday urged the people in the area to maintain peace, saying some people were purposely trying to disturb the atmosphere.

"With folded hands, I request people in Babarpur Assembly to maintain peace. Some people are purposely trying to spoil the atmosphere. I have spoken to Delhi LG and he has assured me that more policemen will be deployed to bring the situation under control," Rai said in a tweet.

Jeddah, Jul 26: The city of Makkah is opening its arms again to welcome pilgrims for the annual Hajj — although only a handful compared with previous years.

Because of the COVID-19 pandemic, this year’s event is limited to about 1,000 pilgrims, all from inside Saudi Arabia, about 700 of whom are expatriates.

Abdullah Al-Kathiri, an Emirati and a recovered COVID-19 patient, postponed his pilgrimage last year because it coincided with his wedding plans. “I’ve heard from many who’ve performed the pilgrimage in past years that it was always a smooth process, even with the massive numbers,” he said. “So you could imagine how it would be with the limited number of pilgrims this year. Surely it will be a great experience.”

Khadija, a Bulgarian expatriate, was overcome with tears when she heard she would be performing Hajj this year. “I didn’t expect they’d accept,” she said. “I’m sure this year’s Hajj will be an exceptional one in all respects.”

Dr. Haifa Yousef Hamdoon, a Tunisian physician in Qassim, is another who did not expect to be accepted because of the low numbers this year. “When I received confirmation of my request, I was overjoyed and couldn’t believe it,” she said.

Mu’taz Mohamed, a Sudanese pilgrim who also lives in Qassim region, praised the preventive and precautionary health measures taken in order to ensure his safety and that of other pilgrims, to enable them to perform the rituals safely.

After completing their arrival procedures, the pilgrims were taken to their accommodation in Makkah, supervised by the Ministry of Hajj and Umrah. They will stay there for four days before beginning their pilgrimage on July 30.