Companies & Sectors
India’s manufacturing growth falls in July; weakest since November

Although manufacturing showed the weakest growth rate since November at 52.9, the index has remained above the 50 mark—below which it indicates contraction

India’s manufacturing sector witnessed a slowdown in July—the weakest growth rate since November—because of moderation in domestic and export orders amid sagging global economy, reports PTI quoting an HSBC survey.


The HSBC India Manufacturing Purchasing Managers’ Index (PMI)—a measure of factory production—declined to 52.9 in July, from 55 in June. Although it showed the weakest growth rate since November, the index has remained above the 50 mark—below which it indicates contraction.


“Manufacturing activity grew at a slower clip in July on the back of power outages and a moderation in new order inflows, with the weak global economic conditions dragging down export orders,” HSBC chief economist for India & ASEAN Leif Eskesen said.


Going forward, HSBC cautioned that a moderation in output is likely as July orders have decelerated faster than inventory accumulation, suggesting that “more moderate expansion in output will continue in the months ahead”.


According to HSBC new export orders fell for the first time since October 2011.


Even as input and output prices have decelerated to an extent, inflation remains “above historical averages”, HSBC said.


In its quarterly monetary policy review on Tuesday, the Reserve Bank of India (RBI) left key interest rates unchanged on fears of deficient monsoon and high inflation.


It also lowered the economic growth projection for the current fiscal to 6.5% from its earlier estimate of 7.3%, stating that the rising government expenditure poses risks to economic stability.


Besides, RBI raised inflation forecast for the fiscal ending March, 2013 to 7%, from the earlier projection of 6.5%.


Electricity outages pan India over the last month also affected production activities as factories were without power, the survey said.


However, the power outages of the last two days of July, which were very severe and impacted nearly half of the country's population, have not been included in the survey.


Considering the power outages in the last two days of July, the manufacturing PMI index would have been hit much harder than reported.


Job creation was recorded at manufacturing firms in India during July, however, the increase was ‘modest’ and at a slower rate than in June, HSBC said.


Analysing the data, BNP Paribas reports:


India’s manufacturing PMI (purchase managers’ index) fell to an eight-month low of 52.9 in July from 55. The new orders and output indices, both down over 3 points, led the move lower. A further fall in new orders relative to inventories points to sustained weakness. Output prices remained historically elevated. These were the observations made by the BNP Paribas Economic Research team on India’s manufacturing PMI in July 2012.


The July manufacturing PMI survey provides more evidence of lacklustre growth. The headline index, while is some way above the lows seen in 2011, is well below average levels, signalling that growth in the manufacturing sector remains sub-par. The survey’s pricing indicators ticked down on the month but remained out of line with dampened demand, suggesting a higher level of inflation. Combined with upside inflation risks from the lifting of domestic energy prices and the poor progress of monsoon, inflation control will remain RBI’s dominant concern.


The weakness observed in the July 2012 survey findings was across the board as all the five sub-components entering the calculation of the headline index dropped on the month. Leading the move lower, however, was the output sub-index, which fell by 3.8 points to 54.7, the lowest since November 2011. The more forward-looking, new orders sub-index also weakened. In July, it dropped by 3.6 points to 54.9, similarly the weakest since November 2011. Within the overall orders balance, new export orders drooped to below 50 for the first time since October 2011, falling to 49.7 from 52.3 in June.


The slide in export orders inevitably reflects India’s relatively high export exposure to the developed world, where signs of activity stalling have been more forthcoming. However, the fact that the wedge between the overall new orders and export orders narrowed a touch also suggests a domestic element to overall orders’ drop in July 2012.


Overall, the headline PMI cements the view that activity in the manufacturing sector, having started the year solidly, has once again moderated. For the RBI, however, other components of today’s survey should lead it to retain its judgement that the space for further reduction in policy rates without aggravating inflation risks is limited. The output price sub-index edged down in July. But, at 57.5, it remained historically elevated and continues to decouple from output developments.


In the present context, it is unlikely that the RBI will go for rate cuts for next few months unless the central government is able to consolidate on the fiscal deficit. Consequently, BNP Paribas says that upside inflation risks from the lifting of domestic energy prices and the poor progress of this year’s monsoon imply a harsh interest rate regime from the RBI.


Indian boxers set for last-16 battle in Olympics

Tomorrow, Beijing Olympics bronze-medallist Vijender will be up against American Olympic Qualification Tournament gold-medallist Terrell Gausha of the United States. Jai Bhagwan, on the other hand, will square off against Gani Zhailauov of Kazakhstan

London: The hype is increasing and so is the pressure as Indian boxers begin their pre-quarterfinal campaign in the Olympic Games with Vijender Singh (75kg) and Jai Bhagwan (60kg) taking on tricky opponents in their last-16 stage bouts on Thursday, reports PTI.


Beijing Olympics bronze-medallist Vijender will be up against American Olympic Qualification Tournament gold-medallist Terrell Gausha of the United States. Jai, on the other hand, will square off against Gani Zhailauov of Kazakhstan.


While Vijender would be facing Gousha for the first time, Jai would have revenge on his mind as he lost to Zhailauov by just a point in the quarter-finals of the World Championships last year.


The overall record between the two boxers is tied at 1-1.


The 26-year-old Vijender, making a record third Olympic appearance in boxing, is aiming to better the colour of his medal in the British capital where the expatriates have come out in droves to support the boxers.


"Vijender's opponent has both stance. He can box both as a southpaw and with an orthodox style. But we are positive about getting a favourable result. Vijender is full of confidence," national coach Gurbax Singh Sandhu told PTI.


Talking about the challenge facing Jai, who is an Asian Championships silver-medallist, Sandhu said, "The Kazakh guy is world number five and the bout will be very tough."


"The overall record says 1-1 but Jai says 'sir, it is my turn now'. It's a contact sport at the end of the day and you never know how lucky or unlucky you would be. So, we can just focus on giving a good account of ourselves," he added.


Of the seven male boxers who qualified for the Olympics, two -- Shiva Thapa (56kg) and Sumit Sangwan (81kg) -- lost in the first round but Sandhu said the team is still quite upbeat.


"The disappointment is behind us now because our boys fought well even when they lost. Overall, the boys are very positive and mood in the team is good," said Sandhu.


Apart from Vijender and Jai, the other Indian boxers in the pre-quarters are L Devendro Singh (49kg), Manoj Kumar (64kg) and third seed Vikas Krishan (69kg), who got a first-round bye.


Activists urge Maharashtra governor to return Housing Bill to Legislature

Activists and citizens have been demanding Maharashtra government to shelve the new Bill, which according to them would fail to protect flat buyers and housing societies, while builders would go away scot-free 

Several activists, led by the Mumbai Grahak Panchayat (MGP), have urged Maharashtra governor K Shankarnarayan to return the new Housing Bill to the Legislature for reconsideration.
“The Maharashtra Housing (Regulation and Development) Bill, 2012, passed by both houses of the Legislature contains several provisions which will shower unjust benefits on builders and would fail to protect buyers and housing societies. Therefore Hon’ble Governor should decline to sign the Bill and return it to the Legislature for reconsideration,” MGP said in a release.
On 16th July, the Maharashtra Legislative Assembly cleared the Housing (Regulation and Development) Bill, 2012, which aims to regulate and promote construction, sale, management and transfer of flats on ownership basis and to establish the Housing Regulatory Authority (HRA) and Housing Appellate Tribunal (HRT).
Advocate Shirish Deshpande, chairman, MGP, said various provisions of the new Housing Bill would take away the rights and benefits that are available to buyers and housing societies under the earlier Maharashtra Ownership Flats (Regulation of the Promotion, Construction, Sale, Management and Transfer) Act, 1963 (MOFA). 
He claimed that a provision of imprisonment for serious offences of builders, which existed in MOFA have been dropped in the new Bill and after lot of pressure, the government has agreed to provide imprisonment of up to three years that too only in case of non-compliance of the orders of the HRA or the HRT.
“This will not deter builders from indulging in various unfair and deceptive practices because originally the HRA can award only penalties and it is non-compliance of such orders on penalties that would invite imprisonment and that too at the discretion of the HRA,” Adv Deshpande said.
Activists and citizens have been demanding that the government shelve the new Bill and strengthen MOFA instead, and a public hearing be organised on the issue.
Earlier while speaking with Moneylife, Ramesh S Prabhu, chairman, Maharashtra Societies Welfare Association, said that it will be more helpful for the consumers if the provisions related to regulatory authority or Appellate Tribunal are incorporated in the MOFA itself, instead of the Act being replaced by a new legislation which is evidently pro-builder.
As per the new Bill, registering the housing project and displaying it on the website of the Housing Regulatory Authority becomes mandatory for the promoter. The promoter will have to pay fees not exceeding Rs50,000 along with the application for registration. 
Pointing out some of the grey areas in the new Bill, Mr Prabhu said, “Builders may just register multiple projects under separate aliases online after registration. The documents that are required for registration have to be self-attested by the builder; and registration will be done before getting them validated by any other authority.”
The delegation of MGP that met the Maharashtra governor also highlighted that the original Bill presented in April 2012 expressly allowed refund of the flat buyer’s money with interest from the date/s when money was paid to the builder. However, the Bill was amended and the Joint Selection Committee dropped this important provision thereby making the buyer less secured and vulnerable to get refund, MGP said.
The MGP also expressed its shock and surprise about a provision in the new Bill, which allows the builder to have a proportionate share in additional floor space index (FSI) taking into account any future increase by the government policy and rules even after executing the conveyance.
Here are the proposed changes suggested by the MGP to the Governor...

The delegation, led by Adv Deshpande and Dr Ramdas Gujarathi, president, MGP, pointed out several short-comings in the Housing Bill, while emphasising that in present form, the Bill will not be able to protect buyers and erring builder would be let off with miniscule penalties for their mischief and violations.   
On 7th August, Moneylife Foundation has organised a discussion on the new Housing Bill. Two of the boldest voices in real estate space, Adv Vinod Sampat and Pankaj Kapoor of Liases Foras would address the gathering at Pu La Deshpande Kala Academy (Mini Theatre), Ravindra Natya Mandir, Near Siddhivinayak Temple, Prabhadevi, Mumbai between 6pm and 8pm. For more details click here


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