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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Sabarimala gold loss: How did the accused reach Rahul's home, asks Vijayan
Thiruvananthapuram (PTI): Kerala Chief Minister Pinarayi Vijayan on Tuesday hit back at Rahul Gandhi for targeting the ruling CPI(M) over the Sabarimala gold loss case during a poll campaign, questioning how the accused in the case had managed to reach the Congress leader's home.
The Marxist veteran was apparently referring to a widely circulated purported photograph in which the prime accused in the Sabarimala gold loss cases, Unnikrishnan Potty, accompanied by some senior Congress leaders, was seen with Sonia Gandhi at her residence in Delhi.
He also said people have already given a reply to Rahul, the Leader of Opposition in the Lok Sabha, on this matter.
The CM's reaction came a day after Rahul sang a line from a popular parody song about CPI(M) leaders' alleged roles in the gold theft at the Sabarimala temple while addressing a corner meeting as part of the assembly polls campaign in Pathanamthitta district.
As he sang the line "swarnam kattathu aarappa" (who stole the gold of Ayyappa) from a song used by the Congress-led UDF to target the ruling Left during the local body polls a few months ago, at the meeting in Pathanamthitta -- the district where the hill shrine of Lord Ayyappa is located-- the crowd cheered Rahul.
Soon after Gandhi targeted the Left party over the gold loss issue, CPI (M) activists began a social media campaign making allegations against his mother and former party chief Sonia Gandhi in connection with the matter.
While replying to a question regarding this, CM Vijayan said the Congress leader already got a befitting reply and should he also repeat the same.
"If he thinks about how all those who were involved in the stealing had reached his home...then he will get a reply. Anyway, we don't have any such flaws," Vijayan added.
Attacking the Left and the BJP over the Sabarimala gold loss issue, Rahul Gandhi on Monday had said that Prime Minister Narendra Modi had forgotten about what happened in Sabarimala, during his visit to Palakkad as part of election campaign.
Rahul claimed that the prime minister remained silent to avoid damaging the LDF.
He had also said that a UDF government would ensure that those responsible for alleged irregularities related to the temple are punished.
