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India’s manufacturing PMI gains steam in Oct, expands for 4th straight month

Growth in manufacturing activities in India continued gathering momentum, remained in the expansion territory for the 4th straight month in October, a private survey showed on Monday.

The seasonally-adjusted IHS Markit Purchasing Managers’ Index came in at 55.9 in October, rising from 53.7 in September. Do note, a PMI number greater than 50 indicates expansion in business activity. A number less than 50 shows contraction.

Data shows that panelists continued to report rising prices for several materials & transportation. Selling charges had to be lifted again as overall input costs increased at the sharpest rate since February 2014. Pollyanna De Lima, Economics Associate Director at IHS Markit, said “Manufacturing activity will continue to expand throughout the third quarter of fiscal year 2021/22 should the pandemic remain under control.”

New orders also posted an increase in October. In fact, the spike in new orders was quite sharp, the survey shows, and expanded at the fastest rate in seven months. And as such, factory output too saw a sharp recovery & was the increased at the fastest pace since March. “Upbeat business confidence and projects in the pipeline should also support production in the coming months,” De Lima added.

Highlighting the inflation concerns, De Lima noted that the input cost inflation accelerated substantially in October, to a near eight-year high amid strong global demand for scarce raw materials. The overall rate of input cost inflation surged to a 92-month high. A vast majority of the manufacturers left their fees unchanged, which led to ‘moderate overall inflation’, the report shows.

“Despite the overall improvement in operating conditions, jobs failed to increase. This was often linked to sufficient capacity to deal with current workloads and government norms surrounding shift work,” De Lima added.

Subscribers under pension schemes rise to 4.63 cr at Sept-end: PFRDA

The Pension Fund Regulatory and Development Authority (PFRDA) on Monday said the number of subscribers in various pension schemes rose 24 per cent to 4.63 crore as at the end of September 2021.

The total number of subscribers in pension schemes regulated by PFRDA had stood at 3.74 crore in the same month a year ago, the pension fund regulator said in a statement.

As of September 30, the assets under management (AUM) in various pension schemes regulated by PFRDA rose to Rs 6,67,379 crore as against Rs 4,94,930 crore at the end of September 2020, showing annual growth of 34.84 per cent, it said.

The PFRDA administers two pension schemes — National Pension System (NPS) and Atal Pension Yojana (APY).

The total number of subscribers under APY grew 32.13 per cent to 312.94 lakh as of September 30, 2021, according to the PFRDA data.

Inflation hits an eight-month low, eases to 4.35% in September

Retail inflation of India eases to 4.35 percent in the month of September from 5.3 percent witnessed in August, government data released on Tuesday showed.

It is for the third time in a row that the Consumer Price Index fell between 4 to 6 percent which is also Reserve Bank of India’s tolerance band for inflation.

The inflation number recorded in September is considerably lower than the reading in the corresponding month of last year during pandemic i.e. 7.27 percent.

Moreover, it is the lowest inflation growth recorded since April, 2021.

The moderation in the inflation growth rate is mainly on account of the ease in food prices that relaxed to 0.68% as compared to a Consumer Food Price Inflation (CPFI) recorded in August.

Since the country is witnessing recovery in demand after reopening of the economy, prices have driven up globally.

Last week, RBI Governor Shaktikanta Das had said that overall, the CPI headline momentum is moderating, which combined with favourable base effects in the coming months could bring about a substantial softening in inflation in the near term.

Employment under MGNREGA in September falls to lowest since Covid outbreak

Work demand and employment provided under Mahatma Gandhi National Rural Employment Guarantee scheme fell to its lowest since the outbreak of the Covid-19 pandemic as recovery gained ground with hiring picking up across sectors.

Data showed that work generated under the scheme fell by 10.9% in September to 23.47 crore person days compared to 26.36 crore person days in September 2020. Sequentially also, work generated under the scheme stood eased. In August work generated stood at 27.61 crore person days.

Demand for work fell by 8.3% last month to touch its lowest at 2.86 crore persons in the last 17 months.

But work provided under the scheme continued to be higher than the pre-covid levels. Households that benefited under the scheme in September 2019 stood at 1.20 crore while the persondays work generated was 14.6 crore.

Data from the Centre for Monitoring Indian Economy also corroborated the trend. It showed that s 8.5 million additional jobs were created in September with 76.5% or 6.5 million created in rural India across non-farm sectors. While agriculture absorbed an additional 0.55 million during the month, the remaining six million were absorbed in non-farm rural jobs, largely construction and manufacturing, it said.

Labour expert KR Shyam Sundar said the substantial decline in Mgnrega jobs in September was on the expected lines.

“With the pick-up in economic activity as seen from several indicators, it is expected that demand for work under Mgnrega will fall as the latter is the fallback option,” he said.

Sundar, however, cautioned that it may be too premature to draw a medium-term conclusion from monthly data, saying that the fluctuations in demand and supply should narrow down for the labour market to stabilise.

The Centre has till date released Rs 60,611.87 crore under the scheme, which is 83.02% of the Rs 73,000 crore allocated for the scheme for 2021-22. The budgeted allocation for 2021-22, however, is 34.52% lower than the revised estimate of Rs 1,11,500 crore in 2020-21, when additional Rs 40,000 crore were given under the scheme to meet the surge in demand for work under Mgnrega following mass scale reverse migration and loss of jobs following the outbreak of the pandemic.

Consumer sentiments improve in October so far: CMIE

Consumer sentiments improved by 9.8% for the week ended October 10 while the index of consumer expectations jumped by 10.4%. However, this is yet to translate into higher consumer spending as households continue to be cautious, the Centre for Monitoring Indian Economy said.

“Most of this extraordinary gain in consumer sentiments emanates from a jump in the expectation that the economy as a whole would do better in the coming one year and also in the coming five years,” the CMIE said in its weekly labour market analysis.

“However, expectations of this translating into better household incomes are still muted while there is only a small increase in the intentions to buy consumer durables,” it added. .

The mean weekly change in consumer sentiments has been 0.6% and the median 0.5% over the past one year though there has been a steady improvement since July. The index of consumer sentiments had scaled up by 7.9% in September, 1.7% in August and a massive 11.1% with the cumulative gain in three months since July at 21.9%.

Data shows the index of current economic conditions rose by 11.9% in September over its level in August while the index of consumer expectations increased by 5.7%. In the quarter ended September, the former increased by 29.8% while the latter increased by a lower 17.7%.

According to CMIE, the principal reason why the index of consumer sentiments improved in September is that more households reported that their incomes were higher than a year ago. As per its data, 8% of the respondents said so as against just 4.6% in August.

However, this improvement in household incomes had a rather marginal impact on household intentions to buy consumer durables with only 4.3% of the households reported that it was a better time to buy consumer durables in September 2021 compared to a year ago while more than 51% considered these to be worse times than a year ago to buy consumer durables.

“This is disappointing given that India is at the eve of its festive season,” CMIE said, adding this is an indication that an increase in income may be necessary but it may not be a sufficient condition for households to start spending.

India poised to become $5-trillion economy by 2024-25: Puri

Union Minister Hardeep Singh Puri on Thursday exuded confidence that India will become a USD five-trillion economy by 2024-25 and USD 10-trillion by 2030. Speaking at a virtual conference of PAFI India, Puri said, “Economic growth is accelerating. India is poised for growth to become a USD 5 trillion economy by 2024-25 and USD 10-trillion economy by 2030”.

On Bharat Petroleum Corporation pestment, he said: “All feedback is proceeding well…”

The petroleum and urban development minister also hailed the recent Air India pestment.

There are reports that after the Air India deal, the government intends to close the disinvestment of

BPCL

this fiscal only.

About the vaccination drives in the country, he said, “We are celebrating one billion doses of vaccines administered today”.

On economic growth momentum, he said petrol consumption is 16 per cent higher than pre-COVID levels, while diesel consumption is 10-12 per cent higher.

“Even the stock market has registered a growth of 250 per cent since March 2020,” he added.

Puri mentioned that the pandemic has led to a different set of growth drivers — revival of health sector, exports, global manufacturing risk index, increased economic activity, achieving renewable energy target and initiative like Gati Shakti, Foreign exchange reserve.

On high energy and oil prices, Puri said the supply curve has been kept below the demand curve, which leads to high prices.

“High price of energy undermines global economic recovery. The ideal is to release increased production in the market and that will be in the interest of the producing country also. For India, Centre and state in the spirit of cooperative federalism need to pool their resources to keep prices in check,” he said.

September service activity slows, jobs rise after 9 months

India’s service activity slowed in September and business confidence weakened though employment rose for first time in ten months, a private survey showed on Tuesday.

The seasonally adjusted India Services Business Activity Index posted 55.2 in September, falling from August’s 18-month high of 56.7.

Amid reports of higher fuel, material, retail and transportation prices, average cost burdens faced by Indian service providers rose further in September. The overall rate of inflation softened to an eight-month low. Anecdotal evidence suggested that optimism was curbed by worries regarding inflationary pressures, according to the report.

“Companies still have spare capacity to accommodate for rising sales and hint that the recovery in employment is by no means guaranteed to continued,” said Pollyanna De Lima, Economics Associate Director at IHS Markit.

Data released last week showed India’s manufacturing activity expanding for the third straight month in September. Taken together, the Composite PMI Output Index was at 55.3 in September, little-changed from 55.4 in August.

India on path of economic recovery, says DEA Secretary Ajay Seth

Economic Affairs Secretary Ajay Seth on Monday said India has got on the path of economic recovery aided by various government reforms in the last seven years under Prime Minister Narendra Modi’s leadership. Notwithstanding the pandemic, he said, the government continued with the reform process and many strategic reforms were announced even during Covid-19.

“During the pandemic period of the past 18 months, it was not just the management of the impact of the pandemic, starting from a health crisis spilling over to the real economy and thereafter some impact onto the financial sector. Managing each of those, but with very strong emphasis on stepping up the reforms, so that the economy can bounce back with a fast growth rate, and also the potential growth rate can be built,” he said.

“The country is on the path of recovery,” he said in a virtual event organised by industry body Ficci.

Talking about one of the challenges, Seth said, the credit offtake has moderated in the last 18 months due to pandemic.

“There are challenges that in the past 18 months because of the lack of private investment demand, the credit offtake has been rather moderate. That’s an area where further work is needed,” he said.

The focus of the government is on inclusive development, he said adding that the government has launched various schemes targeted to support persons, entities with weak economic capacities, not just in the pandemic period, but in the past seven years.

He spelled out some of the schemes the government has launched like the PM KISAN Yojna for income support for farmers, safe shelter scheme PM Awas Yojana, safe drinking water through Jal Jeevan Mission and electricity for all, etc.

With regard to financial sector reforms, he said the introduction of Insolvency and Bankruptcy Code has led to resolution of Rs 2.4 lakh crore of stressed assets, while FDI and FPI liberalisation has bolstered the confidence of foreign investors in the Indian economy.

On the infrastructure development, the secretary said the two major plans –National Infrastructure Pipeline envisaging Rs 111 lakh crore of investment, supplemented by National Monetisation Plan to the extent of about Rs 6 lakh crore — have been announced.

These coupled with a Gatishakti vision of the Prime Minister would lead to seamless movement of goods and services and generation of employment opportunities in the entire country, he said.

“That is one area where we are particularly working on in the finance ministry with other ministries and state governments (as to) how do we implement on the ground these two major plans in the overall vision of Gatishakti,” he said.

He urged the industry to participate in the infrastructure development programme of the government.

The infrastructure spending at the moment is 5-6 per cent of the GDP which should be doubled, he said, adding that is possible only through a partnership between the industry and the government.

India’s services activity remained strong in September, hiring resumed

India’s services industry expanded for a second straight month in September, bolstered by improved domestic demand and easing COVID-19 restrictions, pushing firms to hire more employees for the first time in nearly a year, a private survey showed.

The IHS Markit Services Purchasing Managers’ Index eased to 55.2 in September from August’s 18-month high of 56.7, but stayed comfortably above the 50-mark separating growth from contraction.

“Indian companies continued to benefit from a recovery in demand as the pandemic receded further and restrictions were lifted,” said Pollyanna De Lima, economics associate director at IHS Markit.

“The improved market environment meant that companies managed to secure new work and increase business activity during September.”

The new business sub-index was in expansion territory for a second month, albeit at a lower level, supported by higher sales and increased footfall as authorities eased limitations.

While that indicated improved domestic demand, international demand remained subdued and has now contracted for 19 months in a row, the longest streak since the sub-index started in September 2014.

Business expectations remained positive on hopes the pandemic would continue to retreat and restrictions ease, but the outlook was muted by concerns over high inflationary pressures.

Inflation was estimated to average 5.4% this fiscal year, above the mid-point of the Reserve Bank of India‘s 2%-6% target range but below the upper limit, a Reuters poll showed earlier on Tuesday.

Input costs rose for a 15th straight month due to higher material and transport costs but only part of that burden was passed to consumers as firms try to stay competitive.

But those increases will not prompt the RBI to raise interest rates from the current 4.0% this fiscal year as supporting growth remains its priority.

New jobs were created in the service sector, breaking the nine-month sequence of layoffs. However, the rate was fractional as firms handled the increased demand with the existing workforce while also running down backlogs of work.

“There was another decline in outstanding business. This implies that companies still have spare capacity to accommodate for rising sales and hint that the recovery in employment is by no means guaranteed to continued.” added De Lima.

Expansion in both manufacturing and services activity underpinned the composite index at 55.3 in September, almost unchanged from 55.4 in August.

Formal jobs creation higher in August; 1.46 million net subscribers added to EPFO: Mospi

Formal job creation strengthened further in August with 1.48 million formal jobs created under the Employees’ Provident Fund Organisation compared to 1.31 million created in July, a growth of 12.9%. Year-on year jump in net new subscribers under EPFO was 48% compared to August 2020 when it stood at one million.

Payroll data by the Ministry of Statistics and Programme Implementation, released on Monday, shows 1.32 million new subscribers added under the Employees State Insurance Corporation compared to 1.33 million in July while the addition under the National Pension Scheme stood at 56,827 as against 50,118 in July 2021.

Data further shows that of the total 1.46 million net subscribers added to EPFO, around 0.90 million were new members who came under the social security umbrella of EPFO for the first time while 0.93 million net subscribers exited and rejoined the EPFO by changing jobs within the establishments covered by the retirement fund body.

Graph1

Of the total 1.48 million net subscribers added to EPFO, around 0.91 million new members have come under the social security ambit of EPFO for the first time while around 0.56 million net subscribers exited but rejoined the EPFO by changing jobs within the establishments covered under the purview of EPF & MP Act, 1952.

Of the 1.32 million subscribers added under ESIC, 1.09 million were male and 0.22 million were females. Under NPS, the highest number of subscribers were added by the state governments in July at 35,017 followed by the central government at 11,739 and 10,071 by the corporate sector.

As per the report, since the number of subscribers are from various sources, there are elements of overlap and the estimates are not additive. The report gives different perspectives on the levels of employment in the formal sector and does not measure employment at a holistic level, it further said. The data, however, is subject to change and date is continuously updated

Mospi has been bringing out the employment related statistics in the formal sector covering the period September 2017 onwards, using information on the number of subscribers who have subscribed under three major schemes, namely the Employees’ Provident Fund (EPF) Scheme, the Employees’ State Insurance (ESI) Scheme and the National Pension Scheme (NPS).

While EPF is applicable to establishments having more than 20 workers earning wages up to Rs 15,000 a month, ESIC applies to firms and establishments with 10 or more employees with wages up to Rs 21,000 a month.