China's May industrial output rises 4.4% as economy struggles to recover

China's mechanical yield extended 4.4 percent in May from a year sooner yet the addition was not exactly expected, official information appeared on Monday, proposing the economy is as yet attempting to refocus after the coronavirus emergency.
Experts surveyed by Reuters had anticipated that development should stimulate somewhat to 5.0 percent from a year sooner as more organizations continued creation, following an ascent of 3.9 percent in April, the main extension since the infection rose up out of China before the end of last year.
Retail deals fell 2.8 percent on-year, more than an anticipated 2.0 percent decrease, yet highlighting a few indications of recuperation in customer request after a 7.5 percent drop in April.
Deals have fallen for four straight months as shops, cafés and other swarmed places shut during the pandemic. In spite of the fact that exacting enemy of infection measures have been loose, shoppers stay attentive.
Fixed resource venture fell 6.3 percent in January-May from a similar period a year ago, contrasted and an estimate 5.9 percent fall and a 10.3 percent decrease in the initial four months of the year.

Private division fixed-resource speculation, which represents 60 percent of all out venture, fell 9.6 percent in January-May, contrasted and a 13.3 percent decrease in the initial four months of the year.

Coronavirus spread: Over 600 cases in India, Delhi doctor tests positive

 
The 21-day shutdown announced by the Narendra Modi – led government due to coronavirus (Covid-19) pandemic has put nearly 75 per cent of the Indian economy under lock and key, which is likely to strain the government’s finances and see the fiscal deficit for financial year 2020-21 (FY21) rise by one per cent from the 3.5 per cent target set in the Union Budget presented in February, says the latest report from Nomura.
“Our initial estimates suggest that around 75 per cent of the economy will be shutdown, resulting in a direct output loss of nearly 4.5 per cent. We expect the central government to soon announce a stimulus package of around 0.7-1.1 per cent of gross domestic product (GDP). Along with the growth hit and poor tax collections, we expect the fiscal deficit for FY21 to balloon by over 1 per cent of GDP,” wrote Sonal Varma, managing director and chief India economist at Nomura in a co-authored report with Aurodeep Nandi.
A sensitivity analysis of the adverse impact of lockdown by Motilal Oswal Research suggests that a single day of complete lockdown could shave off 14-19bp/55-75bp from annual/quarterly growth. “With 14 days of complete lockdown in April (assuming things normalize from mid-May'20), GDP could decline 12.2 per cent YoY in 1QFY21, first ever de-growth since the quarterly data became available since late 1990s. With two consecutive quarters of GDP decline, India could see its first recession since 1990s,” said Gautam Duggad, head of institutional research at Motilal Oswal.
Madan Sabnavis, chief economist at CARE Ratings, however, says it may still be a bit too early to say this. “Typically, there is joblessness, drop in production and demand ahead of a recessionary phase. These three ingredients are already there given the 21-day lockdown. Though the lockdown will result in sharp GDP contraction, it is a bit too early to say India is heading into a recessionary phase,” Sabnavis says.
The sectors exempt from this 21-day lockdown – food and pharmaceutical industries, storage, telecom, electricity, banking and capital markets, etc comprise roughly 25 per cent of the economy as per Nomura's estimates, with the activity in the rest of the sectors coming to a grinding halt – at least for the next three weeks.
Recession-1
“On average, every month of lockdown results in output loss of around 8.5 per cent of the annual total. Hence, if 75 per cent of the economy is locked down for a month, then the output loss will around 6.5 per cent. A three week lockdown – as is the case currently – should result in an output loss of close to 4.5 per cent,” Nomura says.
Even when the lockdown period ends, it will take time for the economy to be fully up and running. The public fear factor, analysts feel, will still result in below-normal activity for a few more months. That apart, there will be lingering effects in private consumption and corporate investment demand, all of which will impact the financial sector, especially banks.
“Clearly, for the first time in living memory, many industries/SMEs will be running on zero revenues for close to a month. Even the ‘opening up’ after the lockdown is likely to be measured (lest a ‘second wave’ hits back). This means that there will be a permanent impact of this 21-day shutdown even into the longer-term numbers,” says Sunil Tirumalai, head of research at Emkay Global.
Barclays pegs the 21-day shutdown cost at around $120 billion, or 4 per cent of GDP. “We are shaving down our calendar year 2020 (CY20) GDP forecast from 4.5 per cent to 2.5 per cent and FY20-21 forecast to 3.5 per cent (from 5.2 per cent earlier),” their analysts wrote in a recent report.

IMF says India's growth 'much weaker' than expected; cuts FY20 projection

International News
International Monetary Fund (IMF) on Thursday said that India's economic growth is "much weaker" than expected due to corporate and environmental regulatory uncertainty and "lingering weakness" in some non-Bank financial companies.
"Again, we will have a fresh set of numbers coming up but the recent economic growth in India is much weaker than expected, mainly due to corporate and environmental regulatory uncertainty and lingering weakness in some non-Bank financial companies and risks to the outlook are tilted to the downside, as we like to say," IMF spokesman Gerry Rice told reporters at a news conference.
The economic growth slowed to a seven-year low to 5 per cent in April to June quarter from 8 per cent a year ago, as per the government data.
The International Monetary Fund (IMF) has cut its projection for India's economic growth by 0.3 percentage points to 7 per cent for the fiscal year 2019-20 owing to the "weaker-than-expected outlook" for the domestic demand.
The growth is expected to rise to 7.2 per cent points in FY21, down by the projected growth rate of 7.5 in the earlier report.
The slowdown was largely due to a sharp dip in the manufacturing sector and agriculture output, said the Ministry of Statistics and Programme Implementation in a statement.

 The previous low was recorded at 4.9 per cent in April to June 2012-13. Consumer demand and private investment have weakened amid global trade frictions and dampening business sentiment.

How to revive India's economy? Encourage ecommerce, says Amazon executive

Current Affairs
India needs to encourage ecommerce and reduce red tape to help small businesses sell online and export goods to help revive sagging domestic economic growth, a senior Amazon.com executive said on Wednesday.
"There is so much opportunity to just let ecommerce thrive versus trying to define every single guard rail under which it should operate," Amazon's India head Amit Agarwal told Reuters, ahead of the launch of Amazon's biggest campus in the world in the southern Indian city of Hyderabad, on Wednesday.
India revised its ecommerce rules in early 2019, creating hurdles for Amazon and rival Walmart Inc's ecommerce subsidiary, Flipkart."I feel ecommerce can actually accelerate India's economy in a big way, if it's just allowed to thrive," said Agarwal, whose comments come at a time when India's economic growth has slumped to near five-year lows.
Agarwal said Amazon works with some 500,000 sellers, and has created over 200,000 jobs in India since launching its ecommerce operations in 2013.
He said Amazon's push to get small and medium businesses in India to export has resulted in more than $1 billion in exports and it expects this to exceed $5 billion in the next three years, but red tape is holding some businesses back."Even a seller, who wants to sell out of their state, has to get a tax registration in the new state. How many small business owners would go through the onerous job of doing that?" he said.

"The number of basic paper cut opportunities out there are so many," he said. "I feel we're getting lost in the high level debate around ecommerce and data localization."India's revised ecommerce regulations, along with its push to compel multinationals to store data locally, have irked the U.S...Read More

GDP data under cloud: Govt should know that this is a crisis of credibility

Company News

India’s government has long claimed that the country is one of the fastest-growing large economies in the world. That boast was a crucial part of the ruling party’s message in India’s recent election campaign — that, under Prime Minister Narendra Modi, the economy was in safe hands. Competence and sincerity as an economic manager is central to the image Modi has sought to project.
Unfortunately, that claim looks increasingly unsupportable. Earlier this month, official government figures revealed that the economy had been slowing for three quarters. After months of denial, the government also admitted that unemployment is higher than it has been for four decades. Now, Arvind Subramanian, a well-regarded economist who was till last year one of Modi’s most senior advisers, has argued in a Harvard working paper that India’s official figures overestimate growth by several percentage points. While the government claims that India is growing at 7%, Subramanian suggests it’s actually growing at closer to 4.5%.
Subramanian’s methodology can certainly be questioned, and his estimate of actual GDP growth may be wrong. But, the fact remains that he has merely made explicit, through comparisons across time and with other middle-income economies, the central puzzle of Indian GDP data: If India’s growing so fast, why do most other indicators suggest the economy is stagnating or slowing? Whether looking at credit growth or vehicle purchases, exports or investment, there’s little support for the idea that India is enjoying breakneck growth at the moment.

 It’s past time that India’s government took this problem seriously — both the questions about India’s GDP data and the concerns about what the data reveals about the economy. So far, the government has denied that official data could be questioned, even though senior independent statisticians have quit after accusing politicians of concealing the unemployment figures.