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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What is Iran’s 10-point plan? Key demands ahead of US talks in Islamabad
Tehran/Islamabad: Iran has outlined a 10-point plan as the basis for upcoming talks with the United States, expected to begin in Islamabad on April 11, according to a statement from the Iranian Supreme National Security Council.
The plan lays out Tehran’s key political, military and economic demands, and is being seen as a framework for negotiations following the recent escalation in the region.
Strait of Hormuz at the centre
A major focus of the plan is the Strait of Hormuz, a critical global shipping route. Iran has proposed “controlled passage through the Strait of Hormuz in coordination with the Iranian armed forces,” which it says would give the country a unique economic and geopolitical position.
The plan also calls for the “establishment of a safe transit protocol” in the Strait that would guarantee Iran’s dominance under an agreed mechanism.
Call to end conflict
Iran has demanded “the necessity of ending the war against all elements of the axis of resistance,” signalling its expectation that hostilities should stop not only in Iran but also involving allied groups in the region.
US troop withdrawal
Another key demand is the “withdrawal of US combat forces from all bases and deployment points in the region,” indicating Tehran’s long-standing position against American military presence in West Asia.
Sanctions relief and compensation
The plan places strong emphasis on economic measures. It calls for “full payment of Iran’s damages according to estimates,” along with “the lifting of all primary and secondary sanctions and resolutions of the Board of Governors and the Security Council.”
It also seeks “the release of all Iranian assets and properties frozen abroad,” which have been a major point of contention for years.
Binding global guarantee
Finally, Iran has demanded that all these terms be formally recognised through “a binding Security Council resolution,” suggesting it wants international legal backing to ensure enforcement.
What this means
The 10-point plan reflects Iran’s broader push for security guarantees, economic relief and regional influence. The upcoming talks in Islamabad are expected to test how far both sides are willing to negotiate on these demands.
