India’s manufacturing sector is doing better than we thought, as the Union statistics ministry’s revised GDP estimates showed last week. The purchasing managers index (PMI) could have a told-you-so moment, given how it has been showing robust readings now for an extended period.
The HSBC India Manufacturing PMI, compiled by S&P Global, rose to a four-month high of 56.9 in February. A reading above 50 indicates expansion in activity while one below points to contraction. While China’s index has been in a long slump, India’s has been in expansion zone by several points for a comfortable stretch.
Our rejig of GDP estimation now takes the informal sector into account better and has also sorted out potential price-linked distortions. The sector seems well-placed to expand its share of the economy, as we have long aimed for.
To be sure, our exports have been flagging and the war in West Asia has upped uncertainty over world trade and currency movements. Input costs could also escalate if energy gets costlier as a result of an oil choke. Domestic impulses of growth are crucial. In this context, a factory sector boom is reassuring. This momentum must see no let-up.