According to the former Union minister, existing minimum pension of the EPF scheme is 'totally inadequate' for over 3.5 million who had spent their entire working life
With the government showing no inclination for talks to end their stir, a worried Team Anna held discussions on Wednesday morning while requesting Kejriwal and Rai to end their hunger strike
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.