BQuick On Aug. 31: Top 10 Stories In Under 10 Minutes

This is a roundup of the day’s top stories in brief.

1. Record Contraction In India’s GDP

The Indian economy contracted by a record 23.9% in the April-June 2021 quarter, as the country went into the lockdown to curb the spread of the Covid-19 virus.

• India’s real GDP fell to Rs 26.9 lakh crore in constant terms, 23.9% lower than a year ago, showed data released by the Ministry of Statistics and Programme Implementation on Monday.
• Nominal GDP fell to Rs 38.08 lakh crore, 22.6% lower than the same period last year.
• In gross value added terms, the economy contracted 22.8%.
• The Covid crisis has brought on India’s fourth recession since independence and the first since liberalisation.
• This is the first contraction since India began releasing GDP growth data on a quarterly basis in 1997-98.

A deeper dive into the GDP data shows which sectors took the steepest hits. More details here.

The near-24% contraction in India's gross domestic product may underestimate the impact of the Covid-19 pandemic because the data do not cover the extent of the contraction across various segments of the economy, according to Pronab Sen, the nation's former chief statistician.

Sen explained that the quarterly estimates are based on corporate data, and that too mainly for listed companies.

2. India Blows Past Fiscal Deficit Target In Four Months

India’s fiscal deficit breached the full-year target in April-June as the coronavirus pandemic continues to weigh on the government’s revenue.

• The gap between revenue and expenditure reached Rs 8.21 lakh crore, or 103% of the budgeted estimate, during the reported period, according to Controller General of Accounts data.
• That compares with the deficit of 79% of the budgeted target in the year-ago period.
• India’s revenue receipts stood at 11.3% of the target set for the current fiscal against 19.5% achieved a year ago.
• Its total expenditure came at Rs 10.54 lakh crore, which is 35% of the full-year target.

Read more on what this means for the government’s finances.

3. RBI Brings Out The Balm For Bonds

The Reserve Bank of India on Monday announced a series of steps aimed at maintaining “orderly” market conditions and “congenial” financial conditions.

• The steps came against the backdrop of a sharp rise in bond yields after the Monetary Policy Committee left interest rates unchanged at its last meeting, while raising concerns about the elevated levels of inflation.
• To counter the rise in market interest rates, RBI will conduct special open market operations, hold term repo rate operations, allow banks to refinance via repo auctions at lower costs, and allow lenders to hold fresh government securities.

Get all the details on what the central bank is trying to do.

4. Gautam Adani Expands His Airports Empire

Adani Group’s holding company is set to acquire a controlling stake in Mumbai International Airport Ltd., in a move that may provide the operator of India’s second-largest airport with the much-needed liquidity.

• Adani Airport Holdings Ltd., also a subsidiary of Adani Enterprises Ltd., has signed an agreement to acquire the debt of GVK Airport Developers Ltd., according to an exchange filing.
• It will then convert the acquired debt to equity of GVK Airport Developers—the holding company through which GVK Group holds 50.50% equity stake in MIAL—on mutually agreed terms, subject to obtaining necessary regulatory approvals.

Adani Airport will offer a stand-still to GVK in addition to release of the guarantee given by GVK Power for the debt.

5. India-China Border Tension Flares Up Again

India said its troops clashed with Chinese solders along their contested Himalayan border, the latest skirmish in a conflict that has simmered since May.

• The Chinese troops carried out “provocative military movements” late on Saturday night, India’s Defense Ministry said in a statement Monday.
• It accused the People’s Liberation Army of violating diplomatic and military agreements on the undemarcated area.
• Beijing denied its troops had strayed into Indian territory and maintained that it was in close communication with New Delhi, Chinese Foreign Ministry spokesman Zhao Lijian said at a daily briefing in Beijing on Monday.

India said the fresh attempted incursion is significant and was not carried out by local commanders alone.

6. Sensex Sees Heavy Selling

India's benchmark indices witnessed their biggest single-day fall in over a month after tensions between India and China escalated yet again at the Ladakh border.

• The S&P BSE Sensex ended 2.1% lower at 38,628.
• The NSE Nifty 50 index ended 2.2% lower at 11,387.
• The Nifty Media index was the top sectoral laggard, ending with losses of over 6%.
• Broader markets too were not immune to the selling pressure. Both midcap and smallcap index fell over 4% in today's session.

Follow the day’s trading action here.

Globally, the total number of cases top 2.52 crore, leaving more than 8.46 lakh dead.

• U.S. tally approached the 6 million mark amid outbreaks on college campuses.
• Indonesia saw infections spike over the weekend, while an outbreak in South Korea showed signs of easing.
• The U.K. added most cases since early June.

Follow the global spread of the virus here.

10. Former President Pranab Mukherjee Dead

Pranab Mukherjee, India’s former finance minister who introduced a controversial tax rule that alarmed investors, and who later rose to become the nation’s president, has died. He was 84.

• Mukherjee passed away Monday at a hospital in New Delhi where he was being treated for lung infection.
• The veteran politician was also found to be Covid-19 positive, making him the first high-profile figure in the country to have died after being infected.

Mukherjee’s leadership of steering India’s economy after the 2008 financial crisis is well acclaimed. But he will be remembered for many other things.