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‘IIP dip due to statistical reasons, improvement is imminent’
India’s industrial production contracted to a four-month low of 0.1% in November as compared to a year ago owing to the poor performance of the manufacturing and mining sectors along with a decline in production of capital goods. The industrial output, as measured by the Index of Industrial Production (IIP), dipped from a robust 8.3% in October. According to Sonal Varma of Nomura Financial Advisory and Securities, the momentum in the industrial sector seems to be stabilising and if it continues, the segment may show a significant pick up in the December quarter. According to her, the growth cycle itself seems to be stabilising and that is a positive sign. Besides, Varma feels that if the current trend in industrial production for FY13 continues, there is no reason to be pessimistic. Varma also expects a 5.5% GDP growth for the current fiscal year. Gaurav Kapur of Royal Bank of Scotland is also of the view that the nascent signs of improvement are now visible in the Purchasing Managers’ Index (PMI) numbers of December. “A pick up may still take time but clearly, things are not getting any worse. Hence, the IIP data or whatever
information you can gather from this one number or even the series in the last couple of months, points to the fact that we have hit a bottom. Things have turned around,” he explained. Attributing the decline in the industrial output in November to statistical reasons, Shri Montek Singh Ahluwalia, Deputy Chairman, Planning Commission, recently said that the growth has already bottomed out and efforts taken by the government will yield fruits in the coming month. “This data does not contradict the proposition that the economy has bottomed out. It now needs to move upwards…you need to wait to see what December is like,” the Planning Commission’s Deputy Chairman said. He expressed hope that steps taken by the government have given clear signals of growth in the last several months and would help in improving the investment climate. Moreover, he said that the results of the government’s decision to remove major bottlenecks for big infrastructure projects and improve availability of coal for the power sector would manifest soon. Source: www.moneycontrol.com
‘India’s manufacturing activity at six-month high’
India’s manufacturing activity rose in December to its fastest pace in six months, led by strong factory output and a rise in new orders, a private business survey showed recently. The Purchasing Managers’ Index (PMI) from HSBC, which gives a snapshot of manufacturing health from output to jobs, climbed to 54.7 in December, compared to 53.7 in the previous month. A figure of over 50 indicates growth in the sector, while below 50 points to contraction. “Activity in the manufacturing sector picked up again, led by faster output growth and a further uptick in new orders, which led to a faster increase in backlogs of work,” said Leif
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Eskesen, Chief Economist, HSBC. The survey’s findings—based on data from more than 500 manufacturers—come after India’s economic growth fell to 5.3% in the July–September quarter, extending a slowdown since the start of the year. The government has forecast a growth of 5.7% to 5.9% for the fiscal year to March, which is far below the near double-digit pace India set before the onset of the global financial crisis. India’s inflation cooled to a 10-month low of 7.24% in November, which is still well above the Central Bank’s comfort zone of near 5%, and Eskesen said that pressures were likely to remain.
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M a n u f a c t u r i n g
Hon’ble Prime Minister DR Manmohan Singh asks The auto industry to Quickly adopt electric technology Hon’ble Prime Minister Dr Manmohan Singh recently asked vehicle manufacturers to adopt electric technologies fast in order to reduce dependence on imported oil and supplement efforts for a greener transport system. “It is important that we make efforts for reducing the transport sector’s dependence on oil. One of the ways in which this can be achieved is by faster adoption of the full range of electric vehicle technologies, including hybrid vehicles,” the Hon’ble Prime Minister said after unveiling the National Electric Mobility Mission Plan 2020. As per the National Electric Mobility Mission Plan, 6–7 million electric vehicles along with resultant liquid fuel savings of 2.2–2.5 million tonne can be achieved in 2020. The mission involves a total investment of over `23,000 crore, which would be equally shared by the government and the auto industry. He also asked the automotive industry to make all possible efforts to develop capabilities in the area of electric mobility. At present, the production of electric and hybrid vehicles is negligible in the country. Stating that significant barriers exist for the faster adoption of new electric mobility technologies by consumers, he said, “It is, therefore, necessary to create an ecosystem where these technologies can be nurtured. The government is committed to work with the industry and other stakeholders to make it happen.” The plan is expected to be implemented from April 2013 in a phased manner. The Department of Heavy Industry (DHI) would approach the Finance Ministry soon to gets its nod for funding the mission.