Services sector activities contract sharply in May; firms cut jobs: Survey
New Delhi: India's service sector activities declined sharply in May as the coronavirus pandemic continued to impair business operations, restrict consumer footfall at shops and resulted in job losses, a monthly survey said on Wednesday.
Reflecting a fall in output at an "extreme rate once again", the IHS Markit India Services Business Activity Index stood at 12.6 in May.
Although the headline figure rose from April's unprecedented low of 5.4, the score remained at a level, which prior to the coronavirus pandemic was unparalleled in over 14 years of data collection and pointed to an extreme drop in services activity across India, the survey noted.
A print above 50 means expansion and a score below that denotes contraction, as per the IHS Markit India Services Purchasing Managers' Index (PMI).
According to the survey, output sank sharply due to extended business shutdowns and very weak demand conditions.
"Service sector activity in India is still effectively on hold, latest PMI data suggest, as output fell at an extreme rate once again during May," Joe Hayes, Economist at IHS Markit said.
Hayes noted that demand for services, both domestically and overseas, continued to plummet in May as clients' businesses remained closed and footfall was drastically below normal levels.
Employment continued to fall in response to weak demand and expectations of further challenging conditions, the survey said.
The Composite PMI Output Index, which measures combined services and manufacturing output, also signalled a severe contraction in private sector business activity in May.
The score, which was at 14.8 compared to 7.2 in April, was consistent with a decline in output which was unparalleled prior to the COVID-19 outbreak, the survey said.
Hayes said that with economic output set to fall enormously in the first half of 2020, it is clear that the recovery to pre-COVID-19 levels of gross domestic product (GDP) is going to be very slow.
India was already in the midst of a protracted economic slowdown before the virus hit due to a festering crisis among shadow lenders and declining consumer demand and private investment. Its GDP grew by 4.2 per cent in 2019-20, the slowest pace in 11 years.
On Monday, Moody's Investors Service downgraded India to the lowest investment grade level and kept it on negative watch, largely because the country faces a prolonged period of slower growth relative to its potential and rising debt levels.
Moody's Investors Service, S&P Global Ratings and Fitch Ratings are predicting the first contraction in GDP for India in over four decades and a fiscal deficit blowout following COVID-19 disruptions.
Meanwhile, on Tuesday, Prime Minister Narendra Modi asserted that India will tide over the coronavirus pandemic and will get back on track with the government's decisive policies.
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Ramanagara (Karnataka), Apr 26: JD(S) leader and former Chief Minister H D Kumaraswamy on Friday alleged that cash and gift vouchers were distributed in Bengaluru Rural constituency, especially in Kanakapura Taluk, a charge rejected by Deputy Chief Minister D K Shivakumar.
D K Suresh, brother of Shivakumar, is seeking re-election from the seat for the fourth time.
The NDA, of which JD(S) is a part, has fielded cardiologist Dr C N Manjunath -- brother-in-law of Kumaraswamy and son-in-law of former Prime Minister H D Deve Gowda -- who is contesting on BJP ticket.
As the elections were in progress in 14 constituencies in the state, Kumaraswamy alleged that some supporters of BJP and the JD(S), were attacked in Kanakapura Taluk and their shirts were torn off.
"Guarantee cards (gift vouchers) were distributed with which people can make purchases up to Rs 10,000. When our boys made a noise, they were attacked," he alleged.
Money was also distributed since Thursday night, he said, adding that in Kunigal Taluk, a man died by suicide after Congress workers "attacked, pestered and threatened him."
"Even after giving complaints to the Election Commission, no action was taken," Kumaraswamy said, and added sarcastically: "I want to tell the EC to allow people to openly allow distribution."
Dismissing the allegation, Shivakumar accused Kumaraswamy of specialising in blame shifting.
Speaking to reporters after casting his vote at his birthplace Dodda Aalahalli in Kanakapura Taluk in Ramanagara district, he said, "It is Kumaraswamy’s habit to shift blame to others after committing a crime. He distributes gift cards and money to voters but accuses the Congress of doing so."
Regarding the allegation that Congress is giving gift coupons worth Rs 10,000 in Lulu Mall, Shivakumar said, "Let him (Kumaraswamy) go and lodge a complaint with the Election Commission. It is easy to do hit-and-run without any proof."
