India has emerged as world's fastest growing major economy fuelled by Government expenditure on big-ticket infrastructure projects like highways, railways, power plants and seaports. This has had a multiplier effect in creating more jobs and incomes that have led to an increased domestic demand for goods and services.
The HSBC final India Manufacturing Purchasing Managers' Index (PMI), compiled by S&P Global, was recorded at 58.8 in April which is a wee bit lower than the 16-year high of 59.1 for March. The index has now been reflecting a rising trend for 34 consecutive months.
"April's manufacturing PMI recorded the second fastest improvement in operating conditions in three-and-a-half years, bolstered by strong demand conditions," said Pranjul Bhandari, HSBC's chief India economist.
Business optimism improved as firms expected demand to remain buoyant and planned for higher production volumes in the next 12 months, which led to hiring more workers during the month. The survey states that increased demand by firms also led to an increase in raw material costs and wages.
"However, firms passed these increases onto consumers through higher output charges, as demand remained resilient, resulting in improved margins," Bhandari added.
IMF's World Economic Outlook report released last month has raised India's growth forecast by 0.3 percentage point to 6.8 per cent for 2024-25 and sees the country as a bright spot "supporting global growth over the medium term and spill over to other countries."
With China having fallen behind after the crash in its real estate sector and US sanctions triggering an economic slowdown, the IMF report views India and other G20 large emerging market countries such as Brazil playing a bigger role in the global trading system and pushing global growth going ahead.
The IMF report also vindicates India's economic policy as it attributes the robust growth rate to a "strong domestic demand" which has been created by a huge increase in Government expenditure on large infrastructure projects with a revival in rural demand.
Stepped-up allocations for agriculture, rural employment schemes such as MNREGA and special programmes for women self-help groups have helped to bolster rural demand and create a larger market for industrial products.
(IANS)
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