PMI data dash hopes of a recovery, says Nomura

The PMI data suggests domestic demand will likely remain weak and that inflationary pressures will remain contained, which should open up space for rate cuts, says Nomura in its “Asia Insights” report

India’s manufacturing PMI fell to 50.1 in May from 51 in April, due to a sharp fall in the output and new order sub-indices. Much of this moderation is due to continued weakness in domestic demand, while export orders rose in May, said Nomura in its “Asia Insights” report.

Price pressures eased further as the input prices index fell on lower commodity prices. The output prices index fell below the 50 threshold mark on weak demand and lower input costs, suggesting core inflation is likely to fall in the coming months.


Overall, the PMI data suggests domestic demand will likely remain weak and that inflationary pressures will remain contained, which should open up space for rate cuts. The brokerage expects the Reserve Bank of India to implement a 50 basis point repo rate cut in H2 2013.


According to Nomura, the new orders sub-index fell sharply to 50.5 in May from 52.3 in April, even as the new export orders index rose to 54.0 from 51.1. This suggests that domestic demand weakened in May.


The output sub-index fell below the 50 threshold for the first time since June 2009 (to 48.6 from 50.2), indicating that weak demand, increased competition and persistent supply-side pressures are forcing manufacturers to cut production. The finished goods inventory sub-index was barely changed (50.6 from 50.7) despite weak output. The new orders/inventory ratio fell for a seventh straight month, to 1.00 from 1.03—an indication of weak future demand.


The input prices sub-index eased to a 50-month low of 51.3 from 54.1, reflecting the moderation in commodity prices. More importantly, the output prices sub-index, which has a lagged correlation with core WPI inflation, fell below 50 (to 49.8 from 51.9) on a combination of weaker demand and lower input costs, which indicates that core inflation is likely to trend down further in the months ahead, and likely at a faster pace.


Recent GDP data indicated that domestic demand considerably weakened in Q1 2013. The fall in PMI (to 50.6 for Apr-May versus 53.1 in Q1) indicates that domestic demand weakened further in early Q2 as well, dashing hopes of a quick recovery and in line with Nomura’s view that a recovery is likely to be gradual at best.


Nonetheless, weak demand and lower input costs have also helped reduce inflationary pressures. According to Nomura, weak domestic demand and lower inflation should give policymakers much needed space to lower interest rates, though a weakening currency is complicating their task. The brokerage continues to expect a 50bp repo rate cut in H2 2013. In the June meeting of the RBI, it expects repo rate to be unchanged, alongside a 25bp cut of the cash reserve ratio.


RTI Judgement Series: Display, update information on website as mandated under Section 4

The PIO of the Revenue Department at the Delhi government gave a vague reply when asked about publishing information under Section 4. The CIC then directed the PIO to publish and update information on the department's portal. This is the 106th in a series of important judgements given by former Central Information Commissioner Shailesh Gandhi that can be used or quoted in an RTI application

The Central Information Commission (CIC), while allowing an appeal, directed the Public Information Officer (PIO) of the Revenue Department at the Government of the National Capital Territory of Delhi (GNCTD), to display information on its website as mandated under Section 4 of the Right to Information (RTI) Act.


While giving this judgement on 29 June 2011, Shailesh Gandhi, the then Central Information Commissioner said, “The PIO has given slightly vague replies because there does not appear to be a systematic effort to ensure that Section 4 is complied with. The PIO is directed to ensure that information as directed above is displayed on the website and updated as per the directions.”


New Delhi resident Rambir Singh, on 1 November 2010 sought information regarding implementation of Section 4, from the PIO of the Revenues Department. Here is the information he sought under the RTI Act and the reply provided by the PIO...


1. Whether any action has been initiated/ proposed to be taken against officers/ Public Authority for not initializing action as per Sections 4(1)(a), 4(1)(b), 4(2), 4(3)& 4(4) of the RTI, Act within 120 days from the enactment of the Act    

PIO's Reply: If it is found that no action has been initiated within 120 days of enactment of the Act under Sections 4(1)(a), 4(1)(b), 4(2), 4(3)& 4(4) then action shall be taken


2. Information regarding the status/action taken under Section 4 of the RTI Act        

PIO's Reply: The Question is not clear


3. Information regarding the proposed time to be taken in obeying the directions under Section 4 of the RTI Act       

PIO's Reply: The information Under Section 4 of the act is available with the PIO of this district and the same can be obtained


Singh, citing the information provided by the PIO as unsatisfying and vague filed his first appeal. In his order on 28 January 2011, the First Appellate Authority (FAA) said, “The appellant is required to provide/comply with the provision of section 4 of the RTI Act. Let the PIO/ ADM (South West) give a factual reply in details on the issue i.e. Section 4 of the RTI Act about Dist. South West. The appeal was thereafter disposed of.”


Singh then approached the CIC. In his second appeal, he stated that “(the) PIO has not provided true and complete information as per direction of the FAA. Neither the PIO nor the FAA mentioned the address of the second appellate authority in their reply which, appellant claims, amounts to denial of information.”


During the hearing before the Commission, Mr Gandhi noted that the PIO had given slightly vague replies due to lack of systematic efforts for complying with Section 4 of the RTI Act.


After discussing the matter with both Singh and the PIO, the CIC directed the PIO to ensure that the following information regarding the public authority is displayed on the website of the department:

1 Information every month on the number defaults in meeting the SLA (Service Level Agreements) and amount of penalty recovered form officers for default.

2 Orders passed under Section 81 of Delhi Land Reform Act 1954. 


While allowing the appeal, Mr Gandhi said, “The order is being given by the Commission under its powers under Section 19(8) (a) of the RTI Act. This is a requirement of Section 4 of the RTI Act. It would ensure that both the above information is updated every month before the 10th of the following month.”


He also directed the PIO to send a compliance report along with the URL address (web address) where the information has been uploaded to Singh and the Commission before 25 July 2011.




Decision No. CIC/SG/A/2011/001225/13156

Appeal No. CIC/SG/A/2011/001225


Appellant                                            : Rambir Singh,    

                                                            New Delhi - 110037


Respondent                                        : BS Jaglan

                                                            PIO & ADM (SW)

                                                            Revenue Department, GNCTD

                                                            Old Terminal Tax Building,

                                                            Kapashera, New Delhi - 110037


Govt may take more steps to curb gold import: Finance ministry

Department of Economic Affairs secretary Arvind Mayaram too hinted that the government could take more steps to reduce gold imports, which may include banning sale of the yellow metal by banks

With a staggering gold imports at $15 billion in the last two months, the government Monday said there will be corrective measures including a possible ban on sale of gold coins by banks to check the alarming trend that has put huge pressure on current account deficit (CAD).


The Financial Stability Development Council (FSDC), chaired by finance minister P Chidambaram, met and discussed the issue.


For May, the import of gold was 162 tonnes, Chidambaram said after the meeting.


“The Council noted with concern the significant increase in gold imports in recent months and deliberated on the issues involved in this regard,” the finance ministry said in a statement after the meeting.


Department of Economic Affairs secretary Arvind Mayaram too hinted that the government could take more steps to reduce gold imports, which may include banning sale of the yellow metal by banks.


“More steps will have to be taken to reduce gold imports. Export import policy on gold will have to be reviewed. May consider banning gold coin sale by banks,” he said.


The government and the Reserve Bank of India (RBI) have been taking steps to reduce gold import. High import has widened the current account deficit (CAD), which hit a record high of 6.7% of GDP in October-December quarter of 2012-13.


Commerce and industry minister Anand Sharma also expressed serious concern over the issue.


“Yes, I met the FM and discussed it. We have serious concerns. We cannot allow a situation where gold (imports) in the last two months have reached a stage where it is causing huge stress,” Sharma said after the meeting.


“There will be corrective (measures), banks have taken corrective measures. And I am going to review it. And we will ensure that only for actual users gold is imported not for trading purposes. Except gems and jewellery and the gold refinery..., I don't think it should be allowed for trading,” he said.


Gold imports from India, the world’s largest consumer, stood at 860 tonnes in 2012.


Later speaking at a function, Sharma said, “Indians have an insatiable appetite for gold. Import of gold is our shared concern. Last two months, we have imported gold worth $15 billion. Can we afford it? Are people losing confidence in household savings in banks?”


“That 4% (savings rate) has not been a healthy drop. In my understanding our investment must go up to 38%-39%, savings at 35%-36%. We have to make an effort. The only way to manage CAD is to ease pressure on trade account deficit,” he said.


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