Bikky Khosla | 07 May, 2019
India's
manufacturing sector's performance eased to an eight-month low in April. The
Nikkei India Manufacturing Purchasing Managers’ Index registered a reading of
51.8 in April, against the 52.6 in March. According to the report, a softer
increase in new orders created a domino effect in the sector, restricting
growth of output, employment, input buying and business sentiment. This
softening manufacturing expansion suggests that producers are hardly gearing up
for a rebound.
The
services sector's performance was also not encouraging in the month. According
to the Nikkei India Services Business Activity Index, weak demand conditions
hit the sector, with rates of new business and output growth both cooling to
seven-month lows. The seasonally adjusted index dropped to 51 in April from 52
in March, the weakest upturn in output since last September. According to the
report, competitive conditions and a shift towards online bookings among
customers reportedly restricted new business gains and in turn growth of
activity.
Much of the
slowdown in both the sectors can be attributed to disruptions arising from the
elections, but at the same time it seems voting is not the only reason. In the
service sector, weak demand is a concern while in the manufacturing sector, new
business growth moderated reportedly due to a challenging economic environment.
So the new government will have to work hard to deal with these challenges.
Additionally, considering lack of inflationary pressures, the RBI may go for a
further rate cut in its next monetary policy meeting.
Meanwhile,
according to a new report published by the Finance Ministry, India's economy
slowed down slightly in the last fiscal and dull export is one of the major
factors the contributed to the slowdown. There is little doubt that a healthy
performance by the export sector is a must for sustained growth of the Indian
economy, and the new government will have to work in this direction also if it
wants to ensure healthy growth for India in the coming days.
I invite
your opinions.
