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Freefall: Slowdown, pandemic pulls India’s FY20 GDP growth rate to 11 yr low

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New Delhi, May 29 : The general economic slowdown, along with the impact of the global Covid-19 pandemic, pulled India’s GDP growth rate down to 3.1 per cent in the last quarter of 2019-20.

The Q4 growth rate was slower than 4.1 per cent in Q3 and 5.7 per cent reported for the like period of the previous fiscal.

Consequently, India’s FY20 GDP declined to 4.2 per cent from 6.1 per cent in FY19. This is the slowest rate of India’s GDP growth in the last 11 years.

However, the rate, if looked at from the prism of constant prices at 2011-12 prices, would still be the lowest in the last 8 years.

“Real GDP or Gross Domestic Product (GDP) at Constant (2011-12) Prices in the year 2019-20 is now estimated to attain a level of Rs 145.66 lakh crore, as against the First Revised Estimate of GDP for the year 2018-19 of Rs 139.81 lakh crore, released on 31st January 2020,” the National Statistical Office (NSO) said.

“The growth in GDP during 2019-20 is estimated at 4.2 per cent as compared to 6.1 per cent in 2018-19.”

“GDP at Constant (2011-12) Prices in Q4 of 2019-20 is estimated at Rs 38.04 lakh crore, as against Rs 36.90 lakh crore in Q4 of 2018-19, showing a growth of 3.1 per cent.”

On a sequential basis, the quarterly growth rate has progressively come down from 5.2 per cent in Q1 of 2019-20 to 4.4 per cent in Q2 and 4.1 per cent in Q3.

Last fiscal, the Indian economy faced a severe demand slowdown on account of high GST rates, farm distress, stagnant wages and liquidity constraints.

Additionally, the national lockdown implemented to curb the Covid-19 outbreak has dealt a severe blow to the economy.

However, the NSO said that these estimates on quarterly as well as annual basis are likely to undergo revisions.

“In view of the global Covid-19 pandemic and consequent nationwide lockdow nmeasures implemented since March 2020, the data flow from the economic entities has been impacted,” the NSO said.

“As some of these units are yet to resume operations and owing to the fact that the statutory time-lines for submitting the requisite financial returns have been extended by the government, these estimates are based on the available data.”

Besides, the NSO data showed that Gross Value Added (GVA) growth rate during the fourth quarter of 2019-20 on a YoY basis fell to 3 per cent, from 5.6 per cent during the like period of the previous fiscal.

Similarly, the GVA growth rate during 2019-20 on a YoY basis declined to 3.9 per cent, from 6 per cent during the like period of 2018-19.

The GVA includes taxes but excludes subsidies.

As per the estimates, the growth in the ‘agriculture, forestry and fishing’ is estimated to be 5.9 per cent from YoY growth of 1.6 per cent and ‘mining and quarrying’ of 5.2 per cent from (-) 4.8 per cent.

On the other hand, ‘manufacturing’ is (-) 1.4 per cent from a YoY rise of 2.1 per cent and construction activity plunged by (-) 2.2 per cent from 6 per cent.

Furthermore, the GVA growth rate of ‘electricity, gas, water supply & other utility services’, ‘trade, hotels, transport, communication and services related to broadcasting’, ‘financial, real estate and professional services’ and ‘public administration, defence and other services’ respectively also declined during this period.

Another key growth gauge — Gross Fixed Capital Formation — which underscores the overall acquisition of produced assets in the economy, at constant (2011-2012) prices, is estimated to have declined to 28.8 per cent from a YoY rise of 31.7 per cent in Q4 of 2018-19.

For 2019-20, the GFCF fell by (-) 2.8 per cent from a YoY rise of 9.8 per cent in the previous fiscal.

Commenting on the GDP data, D.K. Aggarwal, President, PHD Chamber of Commerce and Industry, said: “We are optimistic that the growth will revive in the second half of the financial year 2020-21 on the back of various reform measures announced by the Government during the last few weeks.”

India Ratings & Research’s Chief Economist Devendra Kumar Pant said: “From production side, the growth was driven by agriculture and public administration. Government expenditure has helped both GVA and GDP growth.”

“Going forward, with private expenditure growth dwindling due to the shutdown and labour migration, investment demand contracting due to weak consumption demand and stretched corporate balance sheet, government expenditure will again be the growth engine in FY21.”

According to Suman Chowdhury, Chief Analytical Officer, Acuite Ratings & Research: “The figures for FY20 largely reflect the intensification of the economic slowdown that started to build up from Q2/Q3 of FY19. The gradual slowdown in the growth trajectory is indicated in the revised quarterly GDP figures and the estimated print for FY20 at 4.2 per cent as compar ed to 6.1 per cent in FY19.”

“Clearly, the growth momentum got further dampened towards the year end due to the economic disruption from the virus outbreak that already started a couple of weeks before the onset of the pan India lockdown in the last week of March.”

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Fuel dearer again: Petrol prices up by 22-25 p/l, diesel by 24-26

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 Petrol and diesel prices rose sharply again on Saturday reaching new all-time highs as oil marketing companies (OMCs) decided to break the pause in revision of auto fuel prices to bridge the widening under recovery.

Accordingly, the pump price of petrol increased between 22-25 paisa per litre across all major metros on the day while diesel prices increased in the range of 24-26 paisa per litre.

With this, petrol is now priced at Rs 85.70/litre in Delhi as against Rs 85.45 a litre previously. Similarly, in Mumbai petrol prices increased to Rs 92.28 a litre, a 24 paisa increase from Friday’s price of Rs 92.04 a litre. In Chennai and Kolkata, petrol is now priced at Rs 88.29 and 87.11 a litre respectively, an increase of 22 and 24 paisa per litre from the previous day’s.

Diesel on the other hand faced sharper increase, rising by 26 paisa a litre in Mumbai from Friday’s level of Rs 82.40 a litre to Saturday’s retail price of Rs 82.66 a litre. In Delhi, diesel rose 25 paisa per litre to Rs 75.88 a litre; in Chennai by 24 paisa per litre to Rs 81.14 a litre and in Kolkata by 25 paisa per litre to Rs 79.48 a litre.

The increase in retail price of auto fuel came on a day when global crude prices showed some signs of softening declining by less than 1 per cent to close to $55 a barrel. Crude price have remained firm for last couple of weeks in the wake of unilateral production cuts announced by Saudi Arabia and a pick up in consumption in all major economies globally.

The increase petrol and diesel prices is fourth such revision this week. The auto fuels had risen sharply by 25 paisa per litre each on Monday and Tuesday before OMCs decided to give relief to consumers from frequent price rise for last two days.

With Saturday’s revision, the pump price of petrol and diesel has now increased by Rs 1.99 and Rs 2.01 per litre, respectively in January so far with OMCs deciding to break an earlier longer period of pause increasing the retail prices first time this year on January 6. The price had been raised on six different days since then.

The last few increases in pump prices in petrol and diesel has taken its price to record levels across the country in all major metro cities and other towns. The last time the retail price of auto fuels were closer to current levels was on October 4, 2018 when crude prices had shot up to $80 a barrel.

The current price rise is largely on account of steep increase in central taxes of petrol and diesel and firm crude prices.

Petrol price was very close to breaching the all-time high level of Rs 84 a litre (reached on October 4, 2018) when it touched Rs 83.71 a litre on December 7, 2020. But the march had been halted ever since then with no price revision by the OMCs in the month. The price rise started again only on January 6.

Oil companies executives said that petrol and diesel prices may increase further in coming days as retail prices may have to be balanced in line with global developments to prevent OMCs from making loss on sale of auto fuels.

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IndiGo to start Agra-Bengaluru flight from March

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As part of its strategy to bolster its regional connectivity, IndiGo has announced Agra as its 64th domestic destination. The airline will connect Agra to Bengaluru and Bhopal through direct flights under the RCS scheme from March 28.

A weekly flight to Goa is also likely to start early February, sources said.The bookings are open with one-way fares starting at Rs 2,523 for Bhopal and Rs 3,789 for Bengaluru.

Sanjay Kumar, Chief Strategy and Revenue Officer, IndiGo said, “We are pleased to have the Golden Triangle cities mapped on the 6E network, with the addition of Agra as our 64th domestic destination.

This will not only enhance connectivity for domestic travellers, but also aid in expanding international air traffic once restrictions are lifted and travel opens up.

Additionally, these connections will help promote tourism, trade and commerce, with Agra being home to multiple UNESCO world heritage sites, one of the hubs for leather goods production and known for its food and delicacies.”

The Agra tourism industry is upbeat as it expects a big inflow of tourists, both domestic and foreign, in the coming days. The industry had long been demanding air connectivity from Agra to major destinations in India. A lone flight to Jaipur was also halted some months ago.

The last 10 months saw a major setback to tourism, with the footfall of foreign tourists falling to just one per cent. The Taj Mahal and other monuments remained closed due to Covid-19 for over six months.

With restrictions now removed, the flow of visitors has increased and the hospitality industry is hoping to make good in the coming months. The daily evening cultural show at the Kalakriti Auditorium – Mohabbat the Taj – has resumed, as weekend crowds have begun thronging Agra again.

The inter-state buses have also begun operations, particularly to Delhi, from Monday, bringing relief to thousands of commuters heading for Palwal, Faridabad, Gurugram and other neighbouring areas.

Welcoming the announcement by IndiGo to start daily flights from Agra to Bangalore, Bhopal and Lucknow, Sunil Gupta, chairman IATO, northern region said “Tourists were hesitant to visit Agra as there are no flights which are usually considered very safe during the pandemic. We are hoping the number of visitors will now increase. We have demanded international flights also from Agra.”

Vice president of the Tourism Guild, Rajiv Saxena said “the flights will be very helpful and boost tourism in Agra. For the tourists, it will be such a big help as travel time would be reduced.”

Before the pandemic, Agra was annually visited by more than seven million tourists. “With three World Heritage monuments, and a number of other tourist attractions, plus Mathura and Vrindavan close by, Agra badly needed air connectivity.

But due to pressure from the Delhi lobby of hoteliers and travel agents, all kinds of hurdles were being created, but now the Modi government has taken a huge initiative which should see a turnaround in the fortunes of the hospitality industry in Agra,” said founder president of the Agra Hotels and Restaurants Association, Surendra Sharma.

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Equity indices fall, Sensex down 100 points

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The key Indian equity indices traded on a negative note on Friday with the BSE Sensex falling over 100 points.

Around 10.10 p.m., Sensex was trading at 49,518.63, lower by 106.13 points or 0.21 per cent from its previous close of 49,624.76.

It opened at 49,594.95 and has so far touched an intra-day high of 49,663.74 and a low of 49,361.22 points.

The Nifty50 on the National Stock Exchange was trading at 14,574.60, lower by 15.75 points or 0.11 per cent from its previous close.

Manish Hathiramani, technical analyst with Deen Dayal Investments said: “The Nifty has become slightly nervous after facing resistance at 14,750. While the trend still remains positive, we need to approach the index strategically.”

“On the upside we can go up to 14,800-14,900. On the downside, we have a good support at 14,300. Hence traders can initiate long positions with a target of 14,800 and a stop below 14,300,” he said.

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