India industrial production

Last week, India’s prime minister Narendra Modi launched an ambitious push to kick-start India’s relatively small manufacturing sector, lifting its share of India’s GDP to 25 per cent from 15 per cent.

This week, new data suggested how far off that goal may be. The HSBC India Manufacturing Purchasing Managers’ Index fell to a nine-month low in September, down to 51.0 from 52.4 in August. This was probably down to weaker domestic demand, said HSBC, since new export orders had picked up. 

Investors have been awaiting an upturn in India’s economy since Narendra Modi, prime minister, took power in May. But a raft of recent data paints a mixed picture, with inflation moderating while slack industrial production conflicts with some robust consumer spending signals.

The Wholesale Price Index (WPI), out on Monday, confirmed that inflation is easing, reaching a 58-month low of 3.74 per cent year-on-year in August from 5.19 per cent in July. 

By Surjit Bhalla

I’m a natural optimist, but there are still plenty of good reasons to be positive about India’s growth, even if May’s election does not go the way polls suggest. Perhaps the best way to appreciate this is just to assume that this is not one of the most important polls in India’s democratic lifetime. What would you expect to happen? For starters: the normal improvements of the business cycle. 

Take a look at the latest data and India’s economy seems to be improving. Inflation is slowing, industrial production is better than expected and consumer confidence has improved for four consecutive months. But is it all a little too late for the incumbent Congress party? 

Forget the domestic market – look overseas. That seems to be the message from Larsen and Toubro (L&T), India’s largest infrastructure company by sales.

And the slowdown in the domestic economy is not only pushing business abroad but also putting pressure on L&T, as management cut its target for the current fiscal year. 

Just when investors were becoming optimistic about the Indian economy – and its markets – it looks like inflation is ticking up and industrial production has gone into decline.

Data out on Thursday indicate that consumer price inflation (CPI) in India is gaining pace. The CPI figure came in at 11.24 per cent in the month of November, up from 10.09 per cent in October and well ahead of a forecast of 10 per cent in a Reuters poll of analysts. 

India’s industrial production grew 2.5 per cent year-on-year this March, against an average forecast of 2.4 per cent in a Bloomberg poll.

The data follows growth of 0.5 per cent in the month of February, a figure that was revised downwards from 0.6 per cent, and comes after the Reserve Bank of India (RBI) has slashed interest rates three times since the beginning of 2013

India auto factoryIndia’s industrial production increased in January – only the fourth month out of the past ten to see positive growth.

The index of industrial production was up 2.4 per cent year-on-year this January, double the 1.2 per cent rate forecast in the market. But one month’s growth doesn’t mean recovery is imminent. 

India’s industrial production fell in December, disappointing analysts who were expecting a recovery. This is the sixth month of negative growth in the past nine months. 

India auto factoryThe surprise decline in India’s industrial output in November, disclosed in figures published on Friday, was largely due to the Diwali holiday, when many businesses close for days.

Industrial production fell 0.1 per cent in November year-on-year basis, in stark contrast to revised growth of 8.3 per cent in October – when the figure was boosted by the fact that in 2011, Diwali fell in October.

But forget holidays. The real story is that IP has grown in just three of the last eight months. The pressure to cut interest rates is getting stronger

India’s industrial production grew 8.2 percent year-on-year in October, far exceeding analysts’ expectations of 5.1 per cent.

But the figures may be deceptively positive. With the date of Diwali moving to November from October last year, seasonal factors are creating a base effect – which will switch in November, so there could be disappointment to come. 

By Amy Kazmin and Stefan Wagstyl

Indian policy makers had been hoping their economy was bottoming out, and would soon start to show signs of a pick-up.

But data released on Monday shows that India’s industrial production contracted 0.4 per cent in September year-on-year, an unpleasant surprise given widespread expectations of an increase of 2 per cent or more. And to make things worse, the trade deficit hit a record $21bn in October – up from $18bn in September. 

If a GDP growth rate is revised down by 2.6 percentage points and nobody notices, does it make a matter? At the end of August, the Indian government quietly revised the GDP growth figures for every quarter except one during the fiscal years ending in March 2009 and March 2010, with nary a press release to show for it.

Chart of the week looks at what’s behind the great Indian GDP revision. 

Indian industry continued to disappoint in June, according to data released on Thursday by the ministry of statistics. It doesn’t augur well for the GDP growth print for the quarter ended in June. But those hoping for an interest rate cut will likely need to wait a while longer.

Indian industrial activity contracted 1.8 per cent in June, down from 2.4 per cent growth in May and well below the 1 per cent growth consensus. While there was a base effect (activity grew by 9.5 per cent last June), economists said the data boded ill for the beleaguered Indian economy. For the quarter ended in June, activity contracted 0.1 per cent compared to 6.9 per cent growth during the same period last year. 

Indian industrial production beat expectations in the month of May, but when the bar is set so low, at 1.8 per cent, the figure is unlikely to be anything to crow about.

The 2.4 per cent growth, according to data from the ministry of statistics on Thursday, has been slightly overshadowed by downward revision for April.