Opinion
Mint Quick Edit | Sighs of relief amid signs of a slowdown
Summary
- While India’s economy may be slowing, manufacturing and automobile sales data for January indicate resilience. A fiscal stimulus will take effect from April. Will RBI cheapen credit too?
Amid signs of India’s economy losing steam, sighs of relief have been evoked by purchasing managers’ index (PMI) survey findings and car sales in January.
Manufacturing orders last month were the strongest in six months, with the PMI climbing notably to 57.7 from 56.4 in December and a similar 56.5 in November. A reading above 50 denotes expansion, while one below indicates contraction. Job creation was at record levels too, the survey found.
Also Read: Time is running out to revive India’s manufacturing sector
Meanwhile, automobile sales picked up slightly, with manufacturers such as Maruti Suzuki and Mahindra and Mahindra posting healthy increases last month. Some of that offtake may be thanks to purchase incentives that carmakers tend to offer early in the calendar year to help clear the past year’s inventory.
Also Read: Osamu Suzuki, a leader who defied conventions, outlived challenges
The budget’s tax bonanza is also expected to spur sales of consumer durables. Finance minister Nirmala Sitharaman’s tax cuts will put more than ₹1 lakh in the hands of upper-slab taxpayers, who constitute a key market for big-ticket products. Whether we also need the added push of cheaper credit, however, is not clear. That’s a question the Reserve Bank of India will now have to mull over.
