The volume of incoming new work at manufacturing firms in India rose during February with around 29% of monitored companies reporting higher levels of new orders and just 14% noting a decline
The growth of India’s manufacturing sector increased in February supported by strong growth in domestic orders and a rise in international demand. The HSBC India Manufacturing Purchasing Managers’ Index (PMI)—a measure of factory production—stood at 54.2 in February. It declined to a three-month low level of 53.2 in January and was at 54.7 in December.
“Manufacturing activity picked up on an increase in domestic orders,” HSBC Chief Economist for India & ASEAN Leif Eskesen said.
The volume of incoming new work at manufacturing firms in India rose during February with around 29% of monitored companies reporting higher levels of new orders and just 14% noting a decline.
“Anecdotal evidence suggested that new orders increased in line with stronger demand, maintained product quality and the launch of new products,” the report said, adding that a further rise in export orders was recorded amid evidence of stronger demand from international clients.
“Inflation pressures, however, remain firm, with input cost inflation holding steady and inflation of output prices picking up,” Eskesen said, adding that “The numbers underscore that the room for monetary policy easing is limited, even with progress on fiscal consolidation.”
The Wholesale Price Index-based inflation dropped to a three-year low of 6.62% in January. Retail inflation, however, continued to remain in double digits.
In its quarterly policy review on 29th January, the Reserve Bank of India (RBI) after a nine-month long hawkish monetary policy stance slashed its key interest rates by 0.25%.
Meanwhile, employment in the Indian manufacturing sector expanded slightly during February. Firms stated that payroll numbers were increased in tandem with higher production requirements.
The Economic Survey of 2012-13 tabled in Parliament on Wednesday has predicted a growth rate of 6.1%-6.7% for the next fiscal
Majority of the domestically produced natural gas is priced at $4.2 per mmBtu, one-third of the imported cost. Domestic and international firms have been saying that this cost is unremunerative for undertaking exploration in deeper and risky basins
Finance minister P Chidambaram on Thursday said the pricing policy will be reviewed and uncertainties removed. This comes in the wake of oil firms like BP Plc complaining of artificially low gas rates in the country which is holding back investments.
Majority of the domestically produced natural gas is priced at $4.2 per million metric British thermal unit (mmBtu), one-third of the imported cost. Domestic and international firms have been saying that this cost is unremunerative for undertaking exploration in deeper and risky basins.
Chidambaram, while presenting the Budget for 2013-14, said: “The natural gas pricing policy will be reviewed and uncertainties regarding pricing will be removed.”
A government appointed committee headed by C Rangarajan has suggested pricing domestically produced gas at an average of international hub prices and stripped down cost of imported liquid gas (LNG).
Currently, this average comes to about $8-$8.5 per mmBtu, half-way meeting expectations of companies of being allowed to charge a price equivalent to imported liquefied natural gas (LNG).
Oil minister M Veerappa Moily has already accepted the recommendations and is moving Cabinet for a formal approval.
Chidambaram also said the oil and gas exploration policy will be reviewed to move from profit sharing to revenue sharing contracts.
The cost-recovery model of the New Exploration Licensing Policy (NELP), which allows operators to recover all their investment in successful as well as unsuccessful wells from sale of oil and gas before sharing profits with the government, had come in for strong criticism from the Comptroller and Auditor General of India (CAG).
The CAG felt the cost recovery model incentivises firms to keep raising investment to postpone government’s profits.
To put an end to the controversy, the Rangarajan Committee has suggested moving to a revenue sharing model where companies will have to bid upfront stating the part of the production they will share with the government from the very first day.
The finance minister also said NELP blocks that were awarded but are stalled for defence and other clearances will be cleared soon.
Chidambaram also said a policy to encourage exploration and production of shale gas will be announced.