FDI, Manufacturing Sector Hint at Revival of Economy

With the Foreign Direct Investments peaking in the first half of FY2019 and Manufacturing PMI increasing in December, the Indian economy has shown signs of recovery.

Crux of the Matter

15% Rise in FDI

1. Foreign Direct Investment in India in the first half of FY19-20 rose by 15% year-on-year and stood at $26 bn.

2. Services, Computer Hardware and Software, and Telecommunications saw the highest inflow of FDI at $4.45 bn, $4 bn, and $4.28 bn respectively.

3. With an $8 bn investment, Singapore remained India’s largest FDI provider. Mauritius, US, Netherlands and Japan were other significant investors at $6.36 bn, $2.15 bn, $2.32 bn, and $1.78 bn, respectively.

4. Indian Government eased FDI regulations in coal mining, contract manufacturing and brand retail trading.

Manufacturing Sector Takes Positive Strides

1. With the Purchasing Managers’ Index (PMI) reaching 52.7, Manufacturing sector is showing signs of positive consumer demand. PMI above 50 represents expansion i the sector, while below 50 represents contraction.

2. 4 out of the 5 components that make the PMI increased. Consumer demand, supported by demand for intermediate goods, carried the growth.

3. Other factors pointing at the economic revival are increased GST collection, core sector improvement, gradually rising auto sales, and increasing exports of non-oil products. Rising sales comprised majorly of foreign demand for goods and services.

4. Pollyanna de Lima, who is the chief economist at IHS Markit that conducted this survey, said that market optimism was weak and that that sentiment may hinder investments and job creation.

5. Inflation for industrial input and output charges indicated that favourable demand may allow producers to protect margins in the rising cost environment.

Curiopedia

Purchasing Managers’ Indexes (PMI) are economic indicators derived from monthly surveys of private sector companies. The headline manufacturing PMI is a composite of five of the survey indices. These are New orders, Output, Employment, Suppliers’ delivery times (inverted) and Stocks of purchases. More Info

Curated Coverage

1. The Hindu Business Line – FDI rises 15% during Apr-Sept to $26 bn

2. Live Mint – Ailing manufacturing sector turns a corner in December

3. The Hindu Business Line – Solid rise in factory orders boosts manufacturing PMI in December

#Economy #FDI #IndianEconomy #Manufacturing