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Last updated: 31 Dec, 2018  

Industry.9.4.Thmb.jpg Manufacturing revival

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Bikky Khosla | 31 Dec, 2018

Two important sets of economic data were released recently: first, on manufacturing growth and second on fiscal deficit. According to the Nikkei India Manufacturing Purchasing Managers' Index, manufacturing sector activity improved in November and touched an 11-month high. This is good news. In contrast, official figures released last week show that fiscal deficit for the first eight months of the ongoing financial year has exceeded the target for the full fiscal. Needless to say, this development does not augur well.

The details show that the Nikkei index strengthened from 53.1 in October to 54.0 in November. This signals a strong improvement in the health of the sector in almost one year. This is the 16th consecutive month that the index has remained above the 50-point mark, which means expansion. Particularly since August, manufacturing has seen healthy recovery and the latest figures add to a rising confidence in the upturn. This should, in turn, have a positive effects on employment generation.

In a written reply to the parliament, Minister of State of Commerce and Industry, C. R. Chaudhary, mentioned that the manufacturing sector has grown 5.6 percent in the April-October period of 2018-19. He added that several measures – including Start-up India, Ease of Doing Business, Modified Industrial Infrastructure Upgradation Scheme, Business Reform Action Plan and Intellectual Property Rights Policy – have been taken for the sector. However, it is a well-known fact that there is a massive scope of improvement in this regard.

Coming to fiscal deficit, the figures which show that the deficit amount for the April-November period at Rs 7.17 lakh crore has exceeded the target for the full fiscal, accounting for 114.8 percent of the budgeted target, is not a good sign. However, the Finance Minister last week said that the current government's track record in this regard has been better than any other government in the history. He sounds confident and we all hope the reality will soon meet his expectation.

I invite your opinions.

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