Reportedly there is suddenly buzz around indian economy, once again. Accordingly a survey has shown that monthly manufacturing activity for january has suddenly shot up to an eight-year high in India. Meanwhile this is remarkable in the sense that it definitely conveys that their is strong demand surge at the factory gates. This means consumption, which had been lying laggard, has spiked in India. Continued low consumption was being held responsible for longish economic slowdown in India.
Currently the Nikkei india Manufacturing Purchasing Managers' Index (PMI), prepared by IHS Markit, rose from 52.7 in december 2019 to 55.3 in january 2020. Furthermore PMI is a key to understand manufacturing activity. A PMI in excess of 50 indicates expansion in manufacturing activity. The surprise improvement has been attributed to spike in demand. Perhaps the main pull force is consumer goods segment. But the real good news could be in expansion in capital goods segment indicating that investments in indian economy might just have revived.
Moreover this comes on the back of the Economic survey and Union Budget presented last week. Both projected a rather higher than expected GDP growth rate for 2020-21 at 6-6.5 per cent. Experts called the projection too optimistic and ambitious. Apparently india Ratings (Ind-Ra), the arm of ratings agency Fitch, actually downgraded corporate credit rating for indian companies. This came after Union Finance minister nirmala sitharaman presented her Union Budget 2020.
