Millennium Post

Infrastructure growth rises to 5.2% in June from 2.8% in May

The eight infrastructure sectors -- coal, crude oil, natural gas, refinery products, fertilisers, steel, cement and electricity -- had expanded by 3.1 per cent in June 2015. The eight core sectors comprise nearly 38 per cent of the total industrial production.

The cumulative growth during the first quarter of the current fiscal was 5.4 per cent. These eight core sector industries had expanded by 3.1 per cent in June 2015. The core sector had expanded by 2.8 per cent in May, slowest in 2016.

As per the data released by the government, coal production increased by 12 per cent in June year-on-year. Similarly, cement production saw a double digit expansion in June (10.3 per cent) over the same in 2015.

Fertiliser production increased 9.8 per cent in June (though slower than the previous month) while petroleum refinery production expansed of 3.5 per cent. The growth in electricity generation was 8.1 per cent on annual basis.

Steel production, with a weight 6.68 per cent in the index, also increased by 2.4 per cent. Natural gas output dipped 4.5 per cent and crude oil production fell by 4.3 per cent in June.

Meanwhile, manufacturing sector grew at its fastest pace in four months in July on surge in new orders, though job market remained muted and inflationary pressure was subdued -- leaving room for RBI Governor Raghuram Rajan to cut rates as a parting gift, a monthly PMI survey showed on Monday.

The Nikkei Markit India Manufacturing Purchasing Managers’ Index (PMI) - a composite indicator of manufacturing performance - rose to 51.8 in July from 51.7 in June. A reading above 50 denotes expansion while one below means contraction.

“India’s manufacturing economy is reviving at the beginning of the second half of 2016 after the slowdown seen in April-June quarter, as growth of both production and new orders continues to strengthen in July,” said Pollyanna De Lima, Economist at Markit and author of the report.

Supported by greater demand from both domestic and external markets, new business orders rose at the fastest pace since March. Although factory output also expanded at the fastest rate since March and backlog accumulation intensified, businesses refrained from creating jobs.

Only one per cent of the surveyed companies took on additional workers in July and almost all the remaining respondents signalled no change in payroll numbers. “The ongoing muted trend for employment indicates that companies remain somewhat uncertain regarding the sustainability of the upturn,” Lima added.

The depreciation of rupee also supported Indian exporters as survey data pointed to the quickest rise in new business from abroad since January.

Offering respite to firms, cost burden rose at a modest and slower rate and the improving demand environment meant businesses were able to raise their own charges in July. 

Inflation to ease with monsoon impact on vegetable prices: SBI
SBI Chairperson Arundhati Bhattacharya on Monday said the progress of monsoon has been normal and inflation will cool down once the rainfall gets factored into the vegetable prices. “The effect of normal monsoon on vegetable prices is yet to be felt. Once that happens, we hope the inflation trajectory will move downwards,” Bhattacharya said in a foreword to a report by the bank’s economic research wing. She said Central India has received the highest rainfall so far which is ten per cent above the normal level, but East and North East are lagging behind with a 14 per cent deficiency. 

It can be noted that many parts of the country have been facing a drought-like situation for last two years. Inflation measured by consumer prices inched up to 5.77 per cent for the month of June, the fastest in nearly two years, on higher food inflation. The release of the data has dashed hopes of a rate cut by the Reserve Bank, which is targeting to pull the number down to 5 per cent by March 2017. 
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