HomeNewsGuidesReadsPodcastsTRANSFIN. EOD
  1. News
  2. Explained

Fitch Further Downgrades GDP Growth Rate of India to 2%

Professor of Financial Economics and Part-time Value Investor, Transfin.
Apr 5, 2020 3:08 AM 5 min read

Fitch further downgrades India's GDP growth to 2%. Tourism industry in India estimates an overall loss of ₹5tr ($50bn) and job cuts for over 5 crore people. Air India stops bookings till April 30th. 




Fashion, beauty and furniture startups struggle amidst nationwide lockdown.

No More Fast-Growing

Startups in fast-growing consumer categories such as fashion, beauty and furniture are struggling amidst the nationwide lockdown with demand being massively hit as consumers pare discretionary spending, restricting themselves to essential items such as groceries and medicines. 


Companies such as Nykaa, FabAlley and Indya have had to shut their retail stores and offices amid the lockdown.


Even giants such as Flipkart and Amazon are expected to report weaker numbers because of weak demand for mobile phones, electronics and fashion - the three categories that make up a majority of their business. [Livemint]


Food delivery services, cab and bike taxi aggregators join hands with online grocers.

In This Together

There has been an unprecedented surge in demand for the home delivery of essential items such as groceries and medicines due to the 21-day nationwide lockdown. 


And following this rise in demand, several food delivery services, cab and bike taxi aggregators, and non-essential ecommerce firms are joining hands with retail chains and online grocers to supply groceries to consumers. 


Uber has teamed up with Spencer's Retail and Big Basket, while it is in advanced talks with Flipkart, Amazon and Big Bazaar. Spencer's and Nature's Basket are also in partnership with bike taxi aggregator Rapido and delivery service Scootsy. Zomato has tied up with Grofers, while Domino's has partnered ITC to deliver essentials through its fleet of delivery personnel. Marico has partnered with Swiggy and Zomato to sell essential food items such as oils and oats. [ET Tech]



BigBasket and Grofers to hire 12,000 staff to meet surge in demand.


Online grocers have been facing an uptick in demand on back of the lockdown. 


However, at the same time, they have also been facing major manpower shortage, as many migrant workers have returned to their native places, amid the coronavirus outbreak.


And now, to meet the rising demand, these online grocers are on a hiring spree. India’s largest online grocer BigBasket has said that it will hire 10,000 permanent on-ground staff to work at warehouses, distribution centres and as delivery personnel, over the next few days.


Its rival Grofers also plans to recruit 2,000 additional workers. Flipkart and Amazon have hiked wages by 90% to attract more workers. [ET Tech]


Amazon may have to postpone Prime Day sales event due to coronavirus pandemic.

Expect a Slight Delay

Ecommerce giant Amazon may be forced to delay its Prime Day sales this year, which usually takes place in July, to until at least August due to the ongoing pandemic. 


A delay would leave Amazon with 5 million extra devices for sale and the platform anticipates loss worth $100m “from excess devices it may now have to sell at a discount.”


A delay will also affect third-party merchants who have come to depend on Amazon's platform for revenue. [The Verge]



Fitch further downgrades India's GDP growth to 2%. 

Fitch Ratings has reduced its FY21 growth projection for India to a 30-year low of 2% in the wake of business shutdown and lower consumer spending after the coronavirus breakout and the subsequent lockdown.


This is a sharp reduction from the 5.1% estimated only 15 days ago. 


On the other hand, Acuite Ratings and Research has estimated that the 21-day lockdown will result in a loss of GDP of almost $98bn.


 Domestic remittances plunge about 80% in the past two weeks. 

The Long Walk Home

Domestic remittances usually from big cities and more affluent areas to India’s rural hinterland - pegged at about ₹2tr ($20bn) a year - plunged about 80% in the past two weeks, hit by a sudden loss of jobs and the mass exodus of the migrant workers.


Fino Payments Bank, Eko India Financial Services, Spice Digital, Oxigen Services India and members of the business correspondent network have seen remittances nosedive since the nationwide lockdown.


“We used to remit ₹5,000cr ($657m) in a month, but that volume is now down to just 20%, and we don’t see this improving in the next six months due to labour dislocation and job losses,” said Rishi Gupta, CEO, Fino Payments Bank.



Tourism industry in India estimates an overall loss of ₹5tr ($50bn) and job cuts for over 5 crore people. 

Tourism in Distress

The tourism industry in India is expected to take a massive hit in the wake of the pandemic with the industry estimating an overall loss of ₹5tr ($50bn) and job cuts for over 5 crore people.  


Of the total losses, the organised sector in the industry - branded hotels, tour operators, travel agencies which are the mainstay of the sector - may be hit the hardest with an estimated loss of around ₹1.58tr ($20bn), according to Confederation of Indian Industry estimates. 


Branded hotel groups are set to lose as much as ₹1.10tr ($10bn), online travel agencies ₹4,312cr ($567m), tour operators (inbound and domestic) ₹25,000cr ($3,289m), adventure tour operators nearly ₹19,000cr ($2,499m) and cruise tourism ₹419cr ($55m).


Extra Crunch

Here's an interesting graphic depicting the mammoth US unemployment claims in their historical context. [@benrileysmith]



Air India stops bookings till April 30th. 

Error 404

National carrier Air India has stopped bookings till April 30th - both for domestic and international flights. 


Other Indian carriers like IndiGo, SpiceJet and GoAir are selling tickets for domestic flights on and after April 15th while international tickets are being sold from May 1st. [ToI]


1st flush premium quality Darjeeling tea wiped out due to coronavirus outbreak. 

Trouble Brewing

For the first time in history, the Darjeeling tea industry on Saturday said it has almost lost its first flush production in the wake of the ongoing lockdown, leading to a financial crunch for garden owners as the premium variety contributes 40% of the annual revenue of the planters.


The first flush accounts for 20% of the 8 million kg annual production in the hills.


Darjeeling Tea Association's former Chairman Ashok Lohia said that the entire first flush crop is exportable and there will be an adverse impact on the annual revenue due to the production loss of this premium variety. [News18]


Congratulations! You've made it to the end. Looking for more takes on Business, Finance, Markets, and Investing? Subscribe to our Wrap Up Newsletter for informative and insightful daily news updates, smartly curated from the top sources, delivered straight to your inbox.