Mumbai: The downward trend in India’s industrial production growth is still a worry despite a leading manufacturing index having turned positive in April, Moody’s Economy.com said in a note.
Activity in Indian factories expanded for the first time in five months in April as a swelling orders pipeline pointed to a tentative recovery, a survey showed on Monday.
The ABN AMRO Bank purchasing managers’ index or PMI based on a survey of 500 companies, rose to 53.3 in April from March’s 49.5, climbing above the threshold of 50 that separates expansion from contraction.
“External demand, which has slumped in recent months, will at best stabilise by year’s end. A strong recovery in outbound shipments is not expected before 2010, meaning export-oriented manufacturers face sluggish business conditions for some time yet,” Sherman Chan, an economist with Moody’s Economy.com said.
Industrial production fell 1.2% in February from a year earlier, but January’s initially reported fall was revised to a rise of 0.4%.
The domestic support for the industrial sector is also weak as funding for infrastructure projects has been limited, Moody’s Economy.com said.
Although the government has planned public-private partnerships to fund infrastructure projects, the current global economic environment has hindered the progress due to a muted response from the private sector and risk averse foreign firms.