xysoom: Indias Key Growth Engine Grinds to Halt in Sign of Deep Slump

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From call centers to hotels to airlines, Indias key services industries have come to a standstill during the coronavirus outbreak, dragging the economy into possibly its worst recession on record.To get more news about WikiFX, you can visit wikifx news official website.

　　Businesses providing services of everything from technology to travel and trade were the first to be hit when the government took unprecedented steps to lock down a nation of 1.3 billion people to stem the pandemics spread. Unlike manufacturing-heavy economies like China and South Korea, in India, the services sector accounts for 55% of gross domestic product -- and the slump in output has had ripple effects on jobs and economic growth.

　　GDP data on Friday will probably show growth cooled in the three months through March to 1.6% from 4.7% in the previous quarter. With services taking a knock, banks like Goldman Sachs Group Inc. see the economy contracting a record 5% in the current fiscal year that began April 1.


At 5.4, India‘s main services index had the world’s worst reading in April, an “astonishingly low” figure, said Priyanka Kishore of Oxford Economics. “The hit to services might end up being similar to manufacturing, as opposed to previous episodes of demand shocks when services remained largely unscathed.”

　　The pandemic poses a challenge for companies such as Infosys Ltd. and Tata Consultancy Services Ltd., who are part of India‘s $181-billion IT services industry that builds software and provides services to some of the world’s biggest banks and retailers. While Infosys and smaller rival Wipro Ltd. refrained from projecting full-year revenue, TCS reported a 1% slip in quarterly profit.

　　Kishore sees sectors that rely more on social interactions, such as hospitality and entertainment, enduring the most pain.

　　Jobs Lost

　　Services emerged as the key employment growth engine before the crisis hit, with the sector even outperforming agriculture and industrial expansion when the economy was slowing last year. The lockdown though has forced businesses offering services like ride-hailing, food delivery, hotel bookings and real estate to cut jobs in recent weeks. About 122 million people were out of jobs in April alone, according to estimates by the Center for Monitoring Indian Economy Pvt.

　　“The tourism industry will witness an unprecedented scale of job losses,” said Patanjali Govind Keswani, chairman and managing director of Lemon Tree Hotels Ltd. “Currently 60% of branded hotels in India are shuttered while the remaining 40% are operating with less than 10% of revenues.”

　　Read: Green Shoots Emerge in World Economy as Virus Lockdowns Ease

　　While a new set of daily activity gauges from Bloomberg Economics suggest the worst may be over as governments ease lockdowns, theres no strong rebound yet. India has allowed businesses to begin gradually reopening since April 20, but a shortage of workers has made it difficult to resume operations fully. The lockdown left millions of migrant workers stranded around the country without access to incomes, while millions more fled to their villages and are reluctant to return to the cities.