The services sector growth in India rose to a three-month high in December supported by favourable economic conditions and positive demand trends, a monthly survey said on Friday. The seasonally adjusted HSBC India Services PMI Business Activity Index rose from 56.9 in November to 59 in December, highlighting a sharp increase in output that was the most pronounced since September. In Purchasing Managers' Index (PMI) parlance, a print above 50 means expansion while a score below 50 denotes contraction.
India's manufacturing sector growth fell to 18-month low in December amid softer increase in factory orders and output, despite minimal inflation, a monthly survey said on Wednesday. The HSBC India Manufacturing PMI survey, conducted by S&P Global, showed that there were softer, albeit sharp, increase in factory orders and output, while business confidence towards the year-ahead outlook strengthened. The seasonally adjusted HSBC India Manufacturing Purchasing Managers' Index (PMI) fell from 56 in November to an 18-month low of 54.9 in December.
Following are comments from economists at leading financial institutions, banks and rating agencies on the interim Budget:
Finance Minister Nirmala Sitharaman will keep on the path of fiscal consolidation and opt for narrowing the FY24 fiscal deficit to as low as 5.8 per cent in the upcoming Budget, analysts said on Tuesday. The government may go for a fiscal deficit number which will be far lower than the 6.4 per cent of GDP budgeted for FY23, they said, pegging the Budget figure for the next fiscal in the range of 5.8 - 6 per cent. Given the fact that this will be the last full Budget of the present government, there may be a temptation to make it into an expansionist one.
'The real estate sector has been badly bruised because it has become too reliant on funding from NBFCs, including housing finance companies. 'When the NBFC industry was rocked late last year by a large default, the real estate sector was hit hard. 'An intricate web of links between rural incomes, construction activity and shadow banks are fuelling the economic slowdown', says Pranjul Bhandari.
One of India's main export destinations, the euro zone, is struggling to revive its economy and battling disinflation.
The government's capex spend is expected to rise and much of this is likely to be focussed on rural India, particularly for housing, roads and irrigation.
Economists caution that the underlying cause could be an alarming drop in demand -- something that's not good for economic growth.
The headline HSBC India Purchasing Managers' Index -- a composite gauge designed to give a single-figure snapshot of manufacturing business conditions -- stood at 54.5 in December, up from 53.3 in the prior month.
A figure above 50 indicates that the sector is expanding, while a figure below that level means contraction.
Low home loan rates by banks could put large players in an advantageous position over smaller non-bank players, believe analysts.
But lower growth numbers in the quarters to come may not mean renewed weakness in the economy at the ground level, says Pranjul Bhandari.
The RBI left interest rates unchanged, saying there was no substantial development on inflation or fiscal fronts to warrant a fresh reduction.
The move to ban Rs 500 and 1000 notes may not curb the root cause of black money.
Insufficient rainfall will have a negative impact on the economy.
Prices of perishable items could spike in the near term.
The Reserve Bank may cut key interest rates as early as this week.
The markets will be eyeing the amendments.
According to bankers and economists, there is room for further rate cut by the RBI as retail and wholesale inflation rates have remained benign.
India's manufacturing PMI rose to 54.5 in December, 2014, while in the corresponding period a year ago it stood at 50.7, just above the crucial 50 mark which separates growth from contraction.
The poll of over 30 economists, taken in the past week, showed Asia's third largest economy will expand 7.8 percent in the fiscal year ending March 2017.
Analysts say markets to be impacted by monsoon, inflation trajectory.
"If there is proper debate in parliament, followed by a vote, then even without the Congress' support, we have a chance to pass it," says Union Minister of State for Finance, Jayant Sinha.
This was the near-unanimous replies of 10 market participants.
Beyond the macro data, there has been little enquiry into the profile of the indebted farmer households, says Shailesh Dobhal.
The central bank had nudged banks to cut lending rates.
FY17 GDP growth faces cash crunch heat
The broader markets, however, outperformed their larger peers.
One Rank One Pension (OROP) will have a significant impact on the country's fiscal bill and the overall cost will be around Rs 16,000 crore.
Pranjul Bhandari, Chief India Economist, HSBC, speaks about a range of issues ranging from inflation, to how Goods and Services Tax and land acquisition bills can help India hit double digit growth, and her impressions about economic growth in the last one year after Narendra Modi took over as India's Prime Minister.
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