Indian manufacturing expanded at the fastest pace in six months in July, a private survey showed, with an increase in new orders. The Indian government is aiming to overhaul policies to revive Asia’s third-largest economy.
The purchasing managers’ index rose to 52.7 from 51.3 in June, Nikkei and Markit Economics said in a statement today. A number above 50 indicates growth.
“This reflects stronger increases of new orders and output. Furthermore, the sector was also boosted by the quickest expansion in export orders since February,” said Pollyanna De Lima, economist at Markit.
“Although the latest data suggest that the manufacturing upturn gained traction, worries regarding the labour market persist,” De Lima said.
Staffing levels were cut for a fourth month, the survey showed.
The new export orders sub-index jumped to 54.5 from 51.8, the highest reading in five months.
Meanwhile, the Narendra Modi-led government is aiming at passing a bill during an ongoing parliament session that unifies the nation’s 29 states under a single sales tax.
This reforms measure would do away with multiple levies across domestic boundaries.
A year after Indian Prime Minister Modi’s landslide election victory, financial markets have given him a positive report card though enthusiasm is cooling.
With opposition parties hindering Modi’s economic push in recent months, investors are reassessing the outlook for Indian assets.
Policy pre-requisites for corporate earnings growth are being ignored, writes Mihir Sharma, editor at Indian daily Business Standard.
“Investors, especially those who invest in real assets on the ground, may be willing to overlook any number of short- or medium-term obstacles if they were convinced that they could participate in the long-term India growth story. But this depends crucially on trust: trust in a secure contracting, regulatory and tax environment,” writes Sharma.
“But this crucial prerequisite is not even on the government’s agenda. It is not a coincidence that India has, for the first time in a decade, shown its steepest decline in a decade over the last year in AT Kearney’s FDI confidence index, dropping out of the top 10 for the first time since 2002. Narendra Modi is running out of time and goodwill; his government needs to focus more,” he adds.
TBP and Agencies