Malaysia's manufacturing sector has registered further loss of momentum during October. Reports read that sector slowdown was slightly stronger than in September and reportedly stemmed from sluggish global market conditions and muted customer demand.

WION Business News | Malaysia: Manufacturing sector loses momentum in October

As per the data released by the National Statistical Office (NSO), India’s Gross Domestic Product (GDP) for the April-June quarter (Q1) slipped by a sharp 23.9 per cent.

First GDP numbers during COVID times

<p>India's manufacturing sector activity contracted at a slightly faster pace in July as demand conditions remained subdued amid prolonged closures, following which firms reduced both staff numbers as well as purchasing activity, a monthly survey said on Monday.</p>

<p>The headline seasonally adjusted IHS Markit India Manufacturing Purchasing Managers' Index (PMI) stood at 46 in July, down from 47.2 in June. It is the fourth straight month of contraction for the Indian manufacturing sector.</p>

<p>In April, the index had slipped into contraction mode, after remaining in the growth territory for 32 consecutive months. In PMI parlance, a print above 50 means expansion, while a score below that denotes contraction.</p>

<p>"Latest PMI data from Indian manufacturers shed more light on the state of economic conditions in one of the countries worst affected by the COVID-19 pandemic," said Eliot Kerr, Economist at IHS Markit.</p>

<p>The survey results showed a re-acceleration of declines in the key indices of output and new orders, undermining the trend towards stabilisation seen over the past two months, Kerr said.</p>

<p>He further noted that "anecdotal evidence indicated that firms were struggling to obtain work, with some of their clients remaining in lockdown, suggesting that we won't see a pick-up in activity until infection rates are quelled and restrictions can be further removed".</p>

<p>As per the survey, output contracted at a slightly faster pace than in June as demand conditions remained subdued with some businesses still closed amid lockdown extensions.</p>

<p>Moreover, export orders also witnessed a decline. Survey participants commented that international clients were hesitant to place orders while the duration of the pandemic remained uncertain.</p>

<p>Deteriorating demand conditions led Indian manufacturers to continue cutting staff numbers during July.</p>

<p>On the cost front, manufacturers reported another decrease in input prices during July, the survey said adding that subdued demand for most goods more than offset the inflationary effects of shortages in some raw materials, the survey said.</p>

<p>However, despite the ongoing negative impact of COVID-19, sentiment towards future activity improved for the second month running, the survey said.</p>


India's manufacturing sector activity contracted at a slightly faster pace in July as demand conditions remained subdued amid prolonged closures, following which firms reduced both staff numbers as well as purchasing activity, a monthly survey said on Monday.

India's manufacturing sector activity contracted at a slightly faster pace in July as demand conditions remained subdued amid prolonged closures, following which firms reduced both staff numbers as well as purchasing activity, a monthly survey said on Monday. The headline seasonally adjusted IHS Markit India Manufacturing Purchasing Managers' Index (PMI) stood at 46 in July, down from 47.2 in June. It is the fourth straight month of contraction for the Indian manufacturing sector. In April, the index had slipped into contraction mode, after remaining in the growth territory for 32 consecutive months. In PMI parlance, a print above 50 means expansion, while a score below that denotes contraction. "Latest PMI data from Indian manufacturers shed more light on the state of economic conditions in one of the countries worst affected by the COVID-19 pandemic," said Eliot Kerr, Economist at IHS Markit. The survey results showed a re-acceleration of declines in the key indices of output and new orders, undermining the trend towards stabilisation seen over the past two months, Kerr said. He further noted that "anecdotal evidence indicated that firms were struggling to obtain work, with some of their clients remaining in lockdown, suggesting that we won't see a pick-up in activity until infection rates are quelled and restrictions can be further removed". As per the survey, output contracted at a slightly faster pace than in June as demand conditions remained subdued with some businesses still closed amid lockdown extensions. Moreover, export orders also witnessed a decline. Survey participants commented that international clients were hesitant to place orders while the duration of the pandemic remained uncertain. Deteriorating demand conditions led Indian manufacturers to continue cutting staff numbers during July. On the cost front, manufacturers reported another decrease in input prices during July, the survey said adding that subdued demand for most goods more than offset the inflationary effects of shortages in some raw materials, the survey said. However, despite the ongoing negative impact of COVID-19, sentiment towards future activity improved for the second month running, the survey said.

India's manufacturing sector activity contracts for fourth straight month in July

<p>The nationwide lockdown in India may or may not be extended beyond May 3, but companies and the manufacturing sector have already prepared their plans. As the priority will be to avoid coronavirus cases at all costs, companies will likely resume only 50 per cent of the work, keeping precautions in mind.&nbsp;</p>

<p>Contributing to around 7.5 per cent of India's GDP and employing over 35 million workers, the auto industry is preparing for big changes. &nbsp;</p>

<p>" We will be taking precautions at all the places, ranging from company buses for employees to canteens where capacity could be reduced to maintain social distancing norms. Production may come down initially but lower initial demand and some stock already lying with us could balance this reduction in production", said Raju B Ketkale, Deputy MD, Toyata Kirloskar Motor.</p>

<p>It's not only the production, but the sales process at dealerships and showrooms of the companies will also be impacted.</p>

<p>"There will be thermal checking and sanitisation points set-up at all the entry and exit points, workstations and the premises of the dealerships and showrooms. A product demonstration will also see a change as a whole new disinfection process will be implemented before every demo, to assure customer safety", said Shashank Srivastava, Executive Director, Maruti Suzuki India</p>

<p>"The concern in all of the manufacturing industries is of the people gathering anywhere in the plant or in the offices. Restrictions will be there to stop the second wave of Coronavirus from occurring", said Ashim Sharma, Partner, NRI Consulting &amp; Solutions.</p>

<p>The service sector is also planning to handle the post-COVID-19 lockdown situation in a different way. Here, the 'work from home' concept is not going to fade away anytime soon.&nbsp;</p>

<p>"Businesses have found out that 'work from home' concept is very suitable for them. As a result of more people working from their place of dwelling, some areas have seen internet and voice traffic surge. Now we are planning for long term viability of these services spread across wide areas. Telecom network has to be firmed up now", said Rajan Mathews, Director-General, Cellular Operators Association of India</p>

<p>Post COVID-19 scenario will be also suitable for further growth of co-working business in India. Co-working workspace provides work stations and workplaces with shared resources including premises, high-speed broadband, electricity, pantry services etc. Those who are not comfortable working from home can use shared spaces at these locations.&nbsp;</p>

<p>"In our business also social distancing norms will change significantly. As a business model co-working will do better. We have seen 50-60 per cent jump in a number of enquiries", said Neetish Sarda, founder Smartworks, a shared office space provider as the company is betting on demand increasing post-COVID-19 lockdown is lifted.</p>


The nationwide lockdown in India may or may not be extended beyond May 3, but companies and the manufacturing sector have already prepared their plans. As the priority will be to avoid coronavirus cases at all costs, companies will likely resume only 50 per cent of the work, keeping precautions in mind.

The nationwide lockdown in India may or may not be extended beyond May 3, but companies and the manufacturing sector have already prepared their plans. As the priority will be to avoid coronavirus cases at all costs, companies will likely resume only 50 per cent of the work, keeping precautions in mind. Contributing to around 7.5 per cent of India's GDP and employing over 35 million workers, the auto industry is preparing for big changes. " We will be taking precautions at all the places, ranging from company buses for employees to canteens where capacity could be reduced to maintain social distancing norms. Production may come down initially but lower initial demand and some stock already lying with us could balance this reduction in production", said Raju B Ketkale, Deputy MD, Toyata Kirloskar Motor. It's not only the production, but the sales process at dealerships and showrooms of the companies will also be impacted. "There will be thermal checking and sanitisation points set-up at all the entry and exit points, workstations and the premises of the dealerships and showrooms. A product demonstration will also see a change as a whole new disinfection process will be implemented before every demo, to assure customer safety", said Shashank Srivastava, Executive Director, Maruti Suzuki India "The concern in all of the manufacturing industries is of the people gathering anywhere in the plant or in the offices. Restrictions will be there to stop the second wave of Coronavirus from occurring", said Ashim Sharma, Partner, NRI Consulting & Solutions. The service sector is also planning to handle the post-COVID-19 lockdown situation in a different way. Here, the 'work from home' concept is not going to fade away anytime soon. "Businesses have found out that 'work from home' concept is very suitable for them. As a result of more people working from their place of dwelling, some areas have seen internet and voice traffic surge. Now we are planning for long term viability of these services spread across wide areas. Telecom network has to be firmed up now", said Rajan Mathews, Director-General, Cellular Operators Association of India Post COVID-19 scenario will be also suitable for further growth of co-working business in India. Co-working workspace provides work stations and workplaces with shared resources including premises, high-speed broadband, electricity, pantry services etc. Those who are not comfortable working from home can use shared spaces at these locations. "In our business also social distancing norms will change significantly. As a business model co-working will do better. We have seen 50-60 per cent jump in a number of enquiries", said Neetish Sarda, founder Smartworks, a shared office space provider as the company is betting on demand increasing post-COVID-19 lockdown is lifted.

Explained: Post-lockdown strategy of manufacturing and service sector

<p>India’s manufacturing activity has expanded at its quickest pace in nearly eight years in January with robust growth in new orders and output, indicating an initial recovery in the demand in the Indian economy.</p>

<p>This comes at a time when there has been widespread concern over the economic slowdown.</p>

<p>The manufacturing Purchasing Managers’ Index or PMI for India shot up to 55.3 in January from 52.7 in December. This is the highest reading since February 2012.</p>

<p>The recovery also suggests the economy may be getting back on firmer footing as initial growth has been registered in the new business sector.</p>

<p>According to a private survey by data analytics firm IHS Markit, hiring activity has also improved in January, with firms increasing employment at the fastest rate in close to seven-and-a-half years.</p>

<p><strong>Also read: <a href="https://www.wionews.com/india-news/indian-economy-experienced-abrupt-slowdown-in-2019-but-its-not-in-a-recession-imf-md-277892">Indian economy experienced abrupt slowdown in 2019, but it’s not in a recession - IMF MD</a></strong></p>

<p>A figure above 50 indicates expansion, however, anything lower signals contraction.</p>

<p>The survey tracked new orders, output, jobs, suppliers’ delivery time, and stocks of purchases at around 400 manufacturers.</p>

<p>The modest growth in manufacturing indicator comes in the backdrop of improvements in several leading indicators, including goods and services tax (GST) collection and core sector industries.</p>

<p>In response to the jump in sales, factories also hired new workers at the fastest rate in more than seven years.</p>

<p>Meanwhile, both input costs and output prices rose at a slower pace, indicating overall inflation may have eased after hitting a more than five year high of 7.35 per cent in December.</p>

<p>This might keep the central bank, which cut its key interest rate by a cumulative 135 basis points last year, on the sidelines over the coming months.</p>


India’s manufacturing activity has expanded at its quickest pace in nearly eight years in January with robust growth in new orders and output, indicating an initial recovery in the demand in the Indian economy.

India’s manufacturing activity has expanded at its quickest pace in nearly eight years in January with robust growth in new orders and output, indicating an initial recovery in the demand in the Indian economy. This comes at a time when there has been widespread concern over the economic slowdown. The manufacturing Purchasing Managers’ Index or PMI for India shot up to 55.3 in January from 52.7 in December. This is the highest reading since February 2012. The recovery also suggests the economy may be getting back on firmer footing as initial growth has been registered in the new business sector. According to a private survey by data analytics firm IHS Markit, hiring activity has also improved in January, with firms increasing employment at the fastest rate in close to seven-and-a-half years. Also read: Indian economy experienced abrupt slowdown in 2019, but it’s not in a recession - IMF MD A figure above 50 indicates expansion, however, anything lower signals contraction. The survey tracked new orders, output, jobs, suppliers’ delivery time, and stocks of purchases at around 400 manufacturers. The modest growth in manufacturing indicator comes in the backdrop of improvements in several leading indicators, including goods and services tax (GST) collection and core sector industries. In response to the jump in sales, factories also hired new workers at the fastest rate in more than seven years. Meanwhile, both input costs and output prices rose at a slower pace, indicating overall inflation may have eased after hitting a more than five year high of 7.35 per cent in December. This might keep the central bank, which cut its key interest rate by a cumulative 135 basis points last year, on the sidelines over the coming months.

India's January manufacturing activity hits nearly 8-year high 

<p>The country's manufacturing sector performance eased to an eight-month low in April as new business growth moderated, curbed by the elections and a challenging economic environment, a monthly survey showed Thursday.&nbsp;</p>

<p>The Nikkei India Manufacturing Purchasing Managers' Index declined from 52.6 in March to 51.8 in April, reflecting the weakest improvement in business conditions since August 2018.</p>

<p>This is the 21st consecutive month that the manufacturing PMI remained above the 50-point mark. In PMI parlance, a print above 50 means expansion, while a score below that denotes contraction.</p>

<p>April PMI data indicated that softer increase in new orders restricted the growth of output, employment and business sentiment "Although remaining inside expansion territory, growth continued to soften and the fact that employment increased at the weakest pace for over a year suggests that producers are hardly gearing up for a rebound," said Pollyanna De Lima, Principal Economist at IHS Markit and author of the report, said.</p>

<p>When looking at reasons provided by surveyed companies for the slowdown, disruptions arising from the elections was a key theme, Lima said, adding that "firms also seem to have adopted a wait-and-see approach on their plans until public policies become clearer upon the formation of a government".</p>

<p>The general election, that began on April 11, is currently underway. Votes will be counted on May 23.</p>

<p>On the prices front, input cost inflation eased to a 43-month low while the rate of charge inflation was marginal and below its long-run average.</p>

<p>"With price pressures in the manufacturing economy cooling and growth losing momentum, it's increasingly likely that the RBI may cut its official rate for a third successive time in June," Lima said.</p>

<p>The next meeting of RBI's Monetary Policy Committee is scheduled on June 3-6.&nbsp;</p>


The country's manufacturing sector performance eased to an eight-month low in April as new business growth moderated, curbed by the elections and a challenging economic environment, a monthly survey showed Thursday.

The country's manufacturing sector performance eased to an eight-month low in April as new business growth moderated, curbed by the elections and a challenging economic environment, a monthly survey showed Thursday. The Nikkei India Manufacturing Purchasing Managers' Index declined from 52.6 in March to 51.8 in April, reflecting the weakest improvement in business conditions since August 2018. This is the 21st consecutive month that the manufacturing PMI remained above the 50-point mark. In PMI parlance, a print above 50 means expansion, while a score below that denotes contraction. April PMI data indicated that softer increase in new orders restricted the growth of output, employment and business sentiment "Although remaining inside expansion territory, growth continued to soften and the fact that employment increased at the weakest pace for over a year suggests that producers are hardly gearing up for a rebound," said Pollyanna De Lima, Principal Economist at IHS Markit and author of the report, said. When looking at reasons provided by surveyed companies for the slowdown, disruptions arising from the elections was a key theme, Lima said, adding that "firms also seem to have adopted a wait-and-see approach on their plans until public policies become clearer upon the formation of a government". The general election, that began on April 11, is currently underway. Votes will be counted on May 23. On the prices front, input cost inflation eased to a 43-month low while the rate of charge inflation was marginal and below its long-run average. "With price pressures in the manufacturing economy cooling and growth losing momentum, it's increasingly likely that the RBI may cut its official rate for a third successive time in June," Lima said. The next meeting of RBI's Monetary Policy Committee is scheduled on June 3-6.

India's manufacturing sector growth slows in April amid election uncertainty: Purchasing Managers' Index

<p>Smartphone-maker Lava is a small player in India's booming mobile communications industry, but it has become a poster child for Prime Minister Narendra Modi's ambitious effort to make India a global hub for electronics manufacturing.</p>

<p>Just a few years ago, Lava imported cheap phones from China. Now it builds its own devices at two factories on the outskirts of New Delhi that employ about 3,500 people, and expansion plans are in the works.</p>

<p>Modi's vow to create tens of millions of new jobs has stuttered on many fronts, but domestic smartphone production has emerged as a bright spot for Asia's third-largest economy. Along with local firms such as Lava, global smartphone giants including Samsung, Oppo and Xiaomi are expanding rapidly in India, and starting to bring along components suppliers while driving contract manufacturers like Foxconn to ramp up.</p>

<p>More than 120 new manufacturing units have created about 450,000 jobs in the mobile phone industry over the past four years, according to the Indian Cellular and Electronics Association, thanks largely to the 'Make In India' campaign and a phased plan featuring stiff duties on imported devices and parts.</p>

<p>That growth has made India the world's second-biggest mobile phone maker and positioned it for further growth as trade tensions and rising costs hobble China's world-leading electronics manufacturing sector.</p>

<p>"India has an opportunity to become a major player in the global supply chain because we have a very strong domestic economy," Vikas Agarwal, the India head of Chinese smartphone maker OnePlus, told Reuters.</p>

<p>The country still needs to encourage the production of high-value components as well as research and development, Agarwal added, "but at least we are off to a very good start."</p>

<p>The Indian industry's emergence is especially visible in Noida, where Lava is based. Once a suburb for tech outsourcing firms, Noida is now bursting with companies making everything from headphones and chargers to high-end smartphones.</p>

<p>Sanjeev Agarwal, Lava's head of manufacturing, says local production is helping it reduce costs and build high-quality devices that can sell for less than $150.</p>

<p>Much of the company's product design is still done in China, Agarwal said, but the company plans to bring that work to India over the next few years.</p>

<p>The local presence allows quicker innovation, he said, as well as lower, tariff-free costs.</p>

<p>Lava has some big neighbours in Noida. Samsung this year opened what it said was the world's biggest mobile phone plant there. The South Korean giant last year said it will spend 49.2 billion rupees ($672.45 million) to expand capacity at the plant over three years.</p>

<p>Not far from Samsung's factory, China's Oppo, one of India's top smartphone players, is building a massive plant too. It is expected to open soon.</p>

<p>ALTERNATIVE TO CHINA</p>

<p>Modi's so-called phased manufacturing plan, introduced in 2016, aims to take advantage of India's huge domestic smartphone market to promote local production. India has more than a billion wireless subscribers, and about 380 million of them do not yet have a smartphone.</p>

<p>The manufacturing plan includes import duties not only on phones, but also on accessories such as phone chargers, batteries and headphones, as well as components including pre-assembled printed circuit boards.</p>

<p>Xiaomi, which competes with Samsung for the top spot in India's smartphone market, makes many of its phones using Foxconn's plants in southern India, with a total of six facilities producing its devices.</p>

<p>Just as important, Xiaomi said this year that it wants its component suppliers to set up shop in India too, a move that could bring as much as $2.5 billion of investment and create as many as 50,000 jobs.</p>

<p>Xiaomi supplier Holitech Technology has committed to investing about $200 million in India over three years in India, with plans to begin manufacturing in early 2019. It will make components such as camera and touch screen modules and fingerprint sensors, Muralikrishnan B, Xiaomi's chief operating officer for India, said in an email.</p>

<p>The big prize for India, local industry officials say, is to become a full-fledged alternative to China as a manufacturing hub.</p>

<p>More and more companies are realising they need a "China plus one strategy," one manufacturing industry source said.</p>

<p>In China, "there is the Trump risk and there are other risks - currency risks, overall wage appreciation risk and so on," the source said, declining to be named because of the sensitivity of the matter.</p>

<p>"Today it's the trade-tariff war, tomorrow it may be something else, a natural disaster," the source added. "The question is then - how do I use India strategically?"</p>

<p>Samsung has said it plans to use its Noida plant as an export hub, but it is unclear whether other manufacturers will follow suit.</p>

<p>To become a true global centre for high-value mobile phone manufacturing, India still needs a more stable, business-friendly policy regime in a country known for heavy-handed regulation and abrupt shifts in industrial strategy, industry executives say. The country also needs better workforce training, said Tarun Pathak, associate director at tech researcher Counterpoint.</p>

<p>"Import taxes kick-started local assembly, but now we need to look beyond just duties," Pathak said.</p>

<p>Xiaomi's Muralikrishnan said bringing the entire electronics manufacturing ecosystem to India would be a big challenge. He added: "Building the expertise to manufacture high-end design flagships locally would also be a big step for the local industry."</p>

<p>Apple, for example, assembles two low-cost models through Wistron in the southern tech hub of Bengaluru. But with little domestic demand for its high-end phones, the company has resisted government pressure to move more of its work from China.</p>


Smartphone-maker Lava is a small player in India's booming mobile communications industry, but it has become a poster child for Prime Minister Narendra Modi's ambitious effort to make India a global hub for electronics manufacturing.

Smartphone-maker Lava is a small player in India's booming mobile communications industry, but it has become a poster child for Prime Minister Narendra Modi's ambitious effort to make India a global hub for electronics manufacturing. Just a few years ago, Lava imported cheap phones from China. Now it builds its own devices at two factories on the outskirts of New Delhi that employ about 3,500 people, and expansion plans are in the works. Modi's vow to create tens of millions of new jobs has stuttered on many fronts, but domestic smartphone production has emerged as a bright spot for Asia's third-largest economy. Along with local firms such as Lava, global smartphone giants including Samsung, Oppo and Xiaomi are expanding rapidly in India, and starting to bring along components suppliers while driving contract manufacturers like Foxconn to ramp up. More than 120 new manufacturing units have created about 450,000 jobs in the mobile phone industry over the past four years, according to the Indian Cellular and Electronics Association, thanks largely to the 'Make In India' campaign and a phased plan featuring stiff duties on imported devices and parts. That growth has made India the world's second-biggest mobile phone maker and positioned it for further growth as trade tensions and rising costs hobble China's world-leading electronics manufacturing sector. "India has an opportunity to become a major player in the global supply chain because we have a very strong domestic economy," Vikas Agarwal, the India head of Chinese smartphone maker OnePlus, told Reuters. The country still needs to encourage the production of high-value components as well as research and development, Agarwal added, "but at least we are off to a very good start." The Indian industry's emergence is especially visible in Noida, where Lava is based. Once a suburb for tech outsourcing firms, Noida is now bursting with companies making everything from headphones and chargers to high-end smartphones. Sanjeev Agarwal, Lava's head of manufacturing, says local production is helping it reduce costs and build high-quality devices that can sell for less than $150. Much of the company's product design is still done in China, Agarwal said, but the company plans to bring that work to India over the next few years. The local presence allows quicker innovation, he said, as well as lower, tariff-free costs. Lava has some big neighbours in Noida. Samsung this year opened what it said was the world's biggest mobile phone plant there. The South Korean giant last year said it will spend 49.2 billion rupees ($672.45 million) to expand capacity at the plant over three years. Not far from Samsung's factory, China's Oppo, one of India's top smartphone players, is building a massive plant too. It is expected to open soon. ALTERNATIVE TO CHINA Modi's so-called phased manufacturing plan, introduced in 2016, aims to take advantage of India's huge domestic smartphone market to promote local production. India has more than a billion wireless subscribers, and about 380 million of them do not yet have a smartphone. The manufacturing plan includes import duties not only on phones, but also on accessories such as phone chargers, batteries and headphones, as well as components including pre-assembled printed circuit boards. Xiaomi, which competes with Samsung for the top spot in India's smartphone market, makes many of its phones using Foxconn's plants in southern India, with a total of six facilities producing its devices. Just as important, Xiaomi said this year that it wants its component suppliers to set up shop in India too, a move that could bring as much as $2.5 billion of investment and create as many as 50,000 jobs. Xiaomi supplier Holitech Technology has committed to investing about $200 million in India over three years in India, with plans to begin manufacturing in early 2019. It will make components such as camera and touch screen modules and fingerprint sensors, Muralikrishnan B, Xiaomi's chief operating officer for India, said in an email. The big prize for India, local industry officials say, is to become a full-fledged alternative to China as a manufacturing hub. More and more companies are realising they need a "China plus one strategy," one manufacturing industry source said. In China, "there is the Trump risk and there are other risks - currency risks, overall wage appreciation risk and so on," the source said, declining to be named because of the sensitivity of the matter. "Today it's the trade-tariff war, tomorrow it may be something else, a natural disaster," the source added. "The question is then - how do I use India strategically?" Samsung has said it plans to use its Noida plant as an export hub, but it is unclear whether other manufacturers will follow suit. To become a true global centre for high-value mobile phone manufacturing, India still needs a more stable, business-friendly policy regime in a country known for heavy-handed regulation and abrupt shifts in industrial strategy, industry executives say. The country also needs better workforce training, said Tarun Pathak, associate director at tech researcher Counterpoint. "Import taxes kick-started local assembly, but now we need to look beyond just duties," Pathak said. Xiaomi's Muralikrishnan said bringing the entire electronics manufacturing ecosystem to India would be a big challenge. He added: "Building the expertise to manufacture high-end design flagships locally would also be a big step for the local industry." Apple, for example, assembles two low-cost models through Wistron in the southern tech hub of Bengaluru. But with little domestic demand for its high-end phones, the company has resisted government pressure to move more of its work from China.

Smartphones booming India's electronics manufacturing sector

<p>Activity in India's manufacturing sector grew at a weaker pace in May from the previous month, a business survey showed&nbsp;on Friday, while inflationary pressures picked up again amid rising oil prices in another sign that an interest rate hike is around the corner.</p>

<p>A slower expansion in output and domestic demand helped push the Nikkei Manufacturing Purchasing Managers' Index, compiled by IHS Markit, down to 51.2 in May from April's 51.6. It also lagged a Reuters poll median of 51.5.</p>

<p>But it remained above the 50-mark that separates growth from contraction for the tenth month in a row.</p>

<p>More significantly, the survey yet again showed a build-up of inflationary pressures that would no doubt be watched closely by policymakers.</p>

<p>It backs a Reuters poll of economists that forecast the Reserve Bank of India (RBI) to hike rates in August, a dramatic turnaround from just a month ago when a survey predicted an increase only in the second half of 2019.</p>

<p>"A build-up of inflationary pressures re-emerged with input cost and output charge inflation at the strongest since February, due to the upswing in global oil prices," Aashna Dodhia, an economist at IHS Markit, said in a release.</p>

<p>A surge in oil prices over the past few months means India's retail inflation has remained above the RBI's target of 4 percent for six months, increasing pressure on the central bank to act sooner than previously expected.</p>

<p>"In efforts to contain inflation and maintain financial stability, it is likely that the RBI will raise interest rates over the summer," said Dodhia.</p>

<p>Friday's&nbsp;survey also showed foreign demand for manufactured goods rose at the strongest pace&nbsp;in three months, though the same cannot be inferred about domestic demand.</p>

<p>A sub-index tracking overall demand declined to 51.6 last month from 52.0 in April, suggesting domestic demand may still be recovering from the botched implementation of a new national tax system last year.</p>

<p>So overall output expanded at a slower pace, leading firms to hire only modestly, and optimism about future output declined after hitting a nine-month high in April.</p>

<p>India GDP grew at its fastest annual pace in nearly two years during the January-March quarter, expanding a better-than-expected 7.7 percent, and retaining its title as the fastest growing major economy by beating China's growth rate of 6.8 percent.</p>


A slower expansion in output and domestic demand helped push the Nikkei Manufacturing Purchasing Managers' Index

Activity in India's manufacturing sector grew at a weaker pace in May from the previous month, a business survey showed on Friday, while inflationary pressures picked up again amid rising oil prices in another sign that an interest rate hike is around the corner. A slower expansion in output and domestic demand helped push the Nikkei Manufacturing Purchasing Managers' Index, compiled by IHS Markit, down to 51.2 in May from April's 51.6. It also lagged a Reuters poll median of 51.5. But it remained above the 50-mark that separates growth from contraction for the tenth month in a row. More significantly, the survey yet again showed a build-up of inflationary pressures that would no doubt be watched closely by policymakers. It backs a Reuters poll of economists that forecast the Reserve Bank of India (RBI) to hike rates in August, a dramatic turnaround from just a month ago when a survey predicted an increase only in the second half of 2019. "A build-up of inflationary pressures re-emerged with input cost and output charge inflation at the strongest since February, due to the upswing in global oil prices," Aashna Dodhia, an economist at IHS Markit, said in a release. A surge in oil prices over the past few months means India's retail inflation has remained above the RBI's target of 4 percent for six months, increasing pressure on the central bank to act sooner than previously expected. "In efforts to contain inflation and maintain financial stability, it is likely that the RBI will raise interest rates over the summer," said Dodhia. Friday's survey also showed foreign demand for manufactured goods rose at the strongest pace in three months, though the same cannot be inferred about domestic demand. A sub-index tracking overall demand declined to 51.6 last month from 52.0 in April, suggesting domestic demand may still be recovering from the botched implementation of a new national tax system last year. So overall output expanded at a slower pace, leading firms to hire only modestly, and optimism about future output declined after hitting a nine-month high in April. India GDP grew at its fastest annual pace in nearly two years during the January-March quarter, expanding a better-than-expected 7.7 percent, and retaining its title as the fastest growing major economy by beating China's growth rate of 6.8 percent.

Indian manufacturing PMI growth slows in May, inflationary pressures pick up

<p>Paul Krugman, the American economist and 2008 Nobel Prize winner, has warned that India could end up with huge mass unemployment if it does not grow its manufacturing sector.&nbsp;</p>

<p>&quot;There is this concept called artificial intelligence that you should be wary of. In future, while diagnosis may be outsourced to a doctor in India, it could also go to a firm based on artificial intelligence. Things like this could be a cause for worry for Indian services sector,&quot; Krugman said while speaking at an event in Delhi on Saturday.&nbsp;</p>

<p>&quot;Japan is no longer a superpower because its working-age population declined, and China is looking the same. In Asia, India could take the lead but only if it also develops its manufacturing sector, not only the services one,&rdquo; he said.&nbsp;</p>

<p>&ldquo;India&rsquo;s lack in the manufacturing sector could work against it, as it doesn&#39;t have the jobs essential to sustain the projected growth in demography. You have to find jobs for people,&rdquo; he said.&nbsp;</p>

<p>India has made rapid progress on the economic front but economic inequality in the country remains an issue, the noble laureate said.</p>

<p>Krugman said India though has become a much &quot;better place to do business&quot; than it was earlier.</p>

<p>&quot;India achieved as much economic progress in the (last) 30 years as Great Britain did in 150 years. It is a very rapid pace of transformation....why does there still seem to be visible poverty in India?&nbsp;</p>

<p>&quot;One problem is the high degree of economic inequality,&quot; he said at the News 18 Rising India Summit.</p>

<p>He also said India has made &quot;enormous strides&quot; in economic progress but the wealth has &quot;not been evenly distributed&quot;.</p>

<p>He also touched upon the problem of corruption that the country has been facing.</p>

<p>&quot;There are issues of corruption. You can`t become Denmark with Chinese levels of corruption,&quot; he said.</p>


“India’s lack in the manufacturing sector could work against it, as it doesn't have the jobs essential to sustain the projected growth in demography. You have to find jobs for people,” he said.

Paul Krugman, the American economist and 2008 Nobel Prize winner, has warned that India could end up with huge mass unemployment if it does not grow its manufacturing sector. "There is this concept called artificial intelligence that you should be wary of. In future, while diagnosis may be outsourced to a doctor in India, it could also go to a firm based on artificial intelligence. Things like this could be a cause for worry for Indian services sector," Krugman said while speaking at an event in Delhi on Saturday. "Japan is no longer a superpower because its working-age population declined, and China is looking the same. In Asia, India could take the lead but only if it also develops its manufacturing sector, not only the services one,” he said. “India’s lack in the manufacturing sector could work against it, as it doesn't have the jobs essential to sustain the projected growth in demography. You have to find jobs for people,” he said. India has made rapid progress on the economic front but economic inequality in the country remains an issue, the noble laureate said. Krugman said India though has become a much "better place to do business" than it was earlier. "India achieved as much economic progress in the (last) 30 years as Great Britain did in 150 years. It is a very rapid pace of transformation....why does there still seem to be visible poverty in India? "One problem is the high degree of economic inequality," he said at the News 18 Rising India Summit. He also said India has made "enormous strides" in economic progress but the wealth has "not been evenly distributed". He also touched upon the problem of corruption that the country has been facing. "There are issues of corruption. You can`t become Denmark with Chinese levels of corruption," he said.

India story could end with mass unemployment: Nobel-winner Paul Krugman

<p>India&rsquo;s developmental goals and the trajectory of expanding economy largely depend on our ability to source energy. Shifting the focus of our economy towards manufacturing sector with &lsquo;Make in India&rsquo; campaign, coupled with the developmental goal of &lsquo;Power for All&rsquo; will be the key drivers of energy demand.</p>

<p>For the nation, which imports around 70 per cent of its primary energy demand, ensuring the security of supply always takes the precedence for policymakers; and the reason why energy policy discourse in India often revolves around &lsquo;Energy Security&rsquo;. In November 2015 Prime Minister Modi announced an idea establishing the &lsquo;International Solar Alliance&rsquo; (ISA), during his speech at 21st Conference of Parties in Paris, a part of the larger narrative, convincing the world of India&rsquo;s commitment towards combating climate change.</p>

<p>The idea was floated earlier during Third India Africa Forum Summit in October to &ldquo;provide a dedicated platform for cooperation among solar rich countries...&rdquo;; and has received encouraging response from across the world &ndash; from tiny African developing nations to developed economies including France and Australia. New Delhi&rsquo;s initiative proved successful in bringing international community closer, but the challenge remains in meeting the stated objective of harnessing solar energy for sustainable development &ndash; and not becoming just another multilateral forum that is high on rhetoric and low on action.</p>

<p>Amidst the price and supply uncertainties for conventional forms of energy coupled with associated geopolitical risks, renewable energy remains the key hope for our future supply of energy. India pledged 175 GW of power from renewable sources by 2022 including 100 GW of solar power, achieving this target largely depends on the availability of funding and ease of technology transfer; with ISA, India has launched a platform where &lsquo;solar rich&rsquo; countries can share their experiences, learn from global best practices, secure funding and access technology.</p>

<p>ISA is an impressive concept theoretically but its success depends on global cooperation and thus diplomacy is essential for development. As of December 2017, ISA framework has 45 signatories, and 15 nations ratifying the framework; a recent public announcement from Beijing, describing its plan to join the solar alliance is a positive development&nbsp;since China is one of the largest manufacturers of renewable energy devices and equipment including photo-voltaic cells.</p>

<p>While ISA aims to achieve 1000 GW power from solar by 2030, the key challenge is about securing finance. ISA is primarily an organisation with the majority of members from developing world, and thus its ability to deal with global north will determine the success of the alliance. It is worth noting that while the US has pulled out of Paris Climate accord, President Trump accused India and China of getting &lsquo;undue advantage&rsquo;; the narrative of this &lsquo;undue advantage&rsquo; could prove to be a challenge for ISA in securing &lsquo;clean energy finance&rsquo; from advanced economies; we know that the US is currently the first and alone in building up such a narrative, it is difficult to predict that nobody else would join this bandwagon in future.</p>

<p>India has its fair share of achievements in harnessing solar energy &ndash; be it one of the largest single location solar power plants (648 MW) in Tamilnadu&rsquo;s Kamuthi or the first airport to run completely on solar power in Kerala&rsquo;s Cochin; these achievements have boosted the credibility of New Delhi&rsquo;s leadership for the alliance. However, the primary challenge for the newly formed alliance will be to prioritise small-scale but inclusive and accessible renewable projects over large-scale &lsquo;demonstrative&rsquo; and &lsquo;headline-making&rsquo; projects, given the global obsession with adjectives such as &lsquo;first&rsquo;, &lsquo;biggest&rsquo; or &lsquo;largest&rsquo;.</p>

<p>New Delhi has been a voice of the global south for long &ndash; from its prominent role in Non-Aligned Movement to representing and empowering voices of developing nations in international organisations and multilateral forums; and thus stakes are high, as India begins to lead the global discourse on renewables through ISA. The success of alliance in promoting and enhancing &lsquo;clean energy&rsquo; supply will also drive India&rsquo;s ambitions to be recognised as an &lsquo;exemplary&rsquo; power.</p>

<p><em>(Disclaimer: The opinions expressed above are the personal views of the author and do not reflect the views of ZMCL).</em></p>


Shifting the focus of our economy towards manufacturing sector with ?Make in India? campaign, coupled with the developmental goal of ?Power for All? will be the key drivers of energy demand.

India’s developmental goals and the trajectory of expanding economy largely depend on our ability to source energy. Shifting the focus of our economy towards manufacturing sector with ‘Make in India’ campaign, coupled with the developmental goal of ‘Power for All’ will be the key drivers of energy demand. For the nation, which imports around 70 per cent of its primary energy demand, ensuring the security of supply always takes the precedence for policymakers; and the reason why energy policy discourse in India often revolves around ‘Energy Security’. In November 2015 Prime Minister Modi announced an idea establishing the ‘International Solar Alliance’ (ISA), during his speech at 21st Conference of Parties in Paris, a part of the larger narrative, convincing the world of India’s commitment towards combating climate change. The idea was floated earlier during Third India Africa Forum Summit in October to “provide a dedicated platform for cooperation among solar rich countries...”; and has received encouraging response from across the world – from tiny African developing nations to developed economies including France and Australia. New Delhi’s initiative proved successful in bringing international community closer, but the challenge remains in meeting the stated objective of harnessing solar energy for sustainable development – and not becoming just another multilateral forum that is high on rhetoric and low on action. Amidst the price and supply uncertainties for conventional forms of energy coupled with associated geopolitical risks, renewable energy remains the key hope for our future supply of energy. India pledged 175 GW of power from renewable sources by 2022 including 100 GW of solar power, achieving this target largely depends on the availability of funding and ease of technology transfer; with ISA, India has launched a platform where ‘solar rich’ countries can share their experiences, learn from global best practices, secure funding and access technology. ISA is an impressive concept theoretically but its success depends on global cooperation and thus diplomacy is essential for development. As of December 2017, ISA framework has 45 signatories, and 15 nations ratifying the framework; a recent public announcement from Beijing, describing its plan to join the solar alliance is a positive development since China is one of the largest manufacturers of renewable energy devices and equipment including photo-voltaic cells. While ISA aims to achieve 1000 GW power from solar by 2030, the key challenge is about securing finance. ISA is primarily an organisation with the majority of members from developing world, and thus its ability to deal with global north will determine the success of the alliance. It is worth noting that while the US has pulled out of Paris Climate accord, President Trump accused India and China of getting ‘undue advantage’; the narrative of this ‘undue advantage’ could prove to be a challenge for ISA in securing ‘clean energy finance’ from advanced economies; we know that the US is currently the first and alone in building up such a narrative, it is difficult to predict that nobody else would join this bandwagon in future. India has its fair share of achievements in harnessing solar energy – be it one of the largest single location solar power plants (648 MW) in Tamilnadu’s Kamuthi or the first airport to run completely on solar power in Kerala’s Cochin; these achievements have boosted the credibility of New Delhi’s leadership for the alliance. However, the primary challenge for the newly formed alliance will be to prioritise small-scale but inclusive and accessible renewable projects over large-scale ‘demonstrative’ and ‘headline-making’ projects, given the global obsession with adjectives such as ‘first’, ‘biggest’ or ‘largest’. New Delhi has been a voice of the global south for long – from its prominent role in Non-Aligned Movement to representing and empowering voices of developing nations in international organisations and multilateral forums; and thus stakes are high, as India begins to lead the global discourse on renewables through ISA. The success of alliance in promoting and enhancing ‘clean energy’ supply will also drive India’s ambitions to be recognised as an ‘exemplary’ power. (Disclaimer: The opinions expressed above are the personal views of the author and do not reflect the views of ZMCL).

Opinion: 'Development' and 'diplomacy' are driving India's energy discourse

<p>Gujarat&rsquo;s development model rests primarily on its industrial performance. Industrial output accounts for nearly 40 per cent of state domestic product as compared to an all-India average of around 30 per cent. Correspondingly 16 per cent of the Gujarat workforce is in manufacturing (which is the largest subset of the industrial sector) as compared to an all-India average of 10.5 per cent. This much of the story is well-known.</p>

<p>But can Gujarat&rsquo;s industrial performance be a desirable model for the rest of the country? One way to address this question is to take a closer look at the way this sector has performed in Gujarat compared to the national average over the last few years.</p>

<p>The most commonly used nationally comparable dataset on the organised manufacturing is the Annual Survey of Industries (ASI) conducted by the Central Statistics Office, which provides data on employment, value added, and other key variables for the &ldquo;factory sector.&rdquo; Note that, this does not include the vast number of micro and small enterprises that are not required to register under the Factories Act.</p>

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<h5>Indian manufacturing has become more and more capital intensive over the years.</h5>
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<p>Here, I take a brief look at what these data reveal for Gujarat. I am looking at the period from 1983 to 2013, but I also examine if the trends in the past fifteen years are any different from the preceding fifteen. At the national level, ASI data show that Indian manufacturing has become more and more capital intensive over the years.</p>

<p>That is, the number of people employed per rupee of fixed capital used has been falling steadily. This trend has been commented on widely in the economics literature as well as the popular press, in the context of &ldquo;jobless growth&quot;. Together with this rise in capital intensity, and partly as a consequence of it, has come increasing labour productivity and a falling share of value-added going to labour in the form of wages and salaries.</p>

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<h5>Gujarat does not stand out as far as employment generation is concerned and if anything does a bit worse than the national average.</h5>
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<p>The trends for Gujarat are similar to the rest of India. However, some interesting and instructive differences also emerge. First, the general trend towards increasing capital intensity is much sharper for Gujarat compared to the all India average or comparable states like Karnataka. So, while in 1983, 63 jobs were created per rupee of fixed capital, by 2014 this was down to less than 5 jobs.</p>

<p>The comparable numbers for India are 59 and 8, and for Karnataka are 70 and 8. Most of the increase in capital intensity has happened in the 1980s and 1990s, with the trend being relatively flat in the 2000s. This has happened nationally. So, Gujarat does not stand out as far as employment generation is concerned and if anything does a bit worse than the national average.</p>

<p>Second, likely as a result of the increasing capital intensity there has been an increasing divergence of labour productivity on the one hand, and wages and salaries on the other hand. Labour productivity refers to value added per employee. The relationship between productivity and employee wages and salaries tells us how much ordinary people have benefited from increases in productivity.</p>

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<p>In the case of Gujarat, adjusting for inflation, annual emoluments (wages and salaries) per person went from ~ INR 47,000 in 1983 to ~ INR 96,000 in 2014 while productivity went from ~ INR 91,000 to ~ INR 750,000 in the same thirty-year period (amounts are in 2004-05 rupee values). That is productivity increased eight-fold while earnings of labour only doubled. This divergence has accelerated over time, particularly during the BJP&rsquo;s tenure.</p>

<p>This divergence between productivity and earnings is observed all over India but is much higher for Gujarat than the national average. Another measure of how much industrial growth and development have benefited ordinary people is the labour share of value-added, i.e. the proportion of value-added accruing to workers in the form of wages and salaries. The nature of changes occurring in the manufacturing sector in India, particularly the increasing capital intensity of production, has meant a steadily falling labour share.</p>

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<h5>In Gujarat while productivity increased eight-fold, earnings of labour only doubled.</h5>
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<p>In Gujarat, the labour share has fallen from 36 per cent in 1982-83 to 18 per cent in 2015. The national average trend is from 40 per cent to 25&nbsp;<span style="background-color: rgb(245, 246, 245);">per cent</span>. For Karnataka, the numbers are 38&nbsp;<span style="background-color: rgb(245, 246, 245);">per cent</span>&nbsp;to 30&nbsp;<span style="background-color: rgb(245, 246, 245);">per cent</span>. This again shows that Gujarat&rsquo;s industrial development has been much more anti-labour than the all-India average.</p>

<p>One possible counter-point is to say that even if the labour share is lower in Gujarat, the level of wages may be higher due to higher productivity. But here too the story is not as clean. In 2014- 2015, the latest year for which data are available, annual emoluments per person employed in Gujarat were INR 229,868 per year (in current rupees) while the national average was INR 221,000 and the Karnataka figure is INR 246,222. So while Gujarat does a little better than the national average, it is by no means a star performer.</p>

<p>Thus, both in terms of job creation, as well as earnings of industrial workers and employees Gujarat, performs either worse than or only slightly better than the national average. At least as far the organised manufacturing sector is concerned, development in Gujarat has benefited capitalists far more than ordinary people.</p>

<p><em>(Disclaimer: The author writes here in a personal capacity).</em></p>


Development in Gujarat has benefited capitalists more than common people.

Gujarat’s development model rests primarily on its industrial performance. Industrial output accounts for nearly 40 per cent of state domestic product as compared to an all-India average of around 30 per cent. Correspondingly 16 per cent of the Gujarat workforce is in manufacturing (which is the largest subset of the industrial sector) as compared to an all-India average of 10.5 per cent. This much of the story is well-known. But can Gujarat’s industrial performance be a desirable model for the rest of the country? One way to address this question is to take a closer look at the way this sector has performed in Gujarat compared to the national average over the last few years. The most commonly used nationally comparable dataset on the organised manufacturing is the Annual Survey of Industries (ASI) conducted by the Central Statistics Office, which provides data on employment, value added, and other key variables for the “factory sector.” Note that, this does not include the vast number of micro and small enterprises that are not required to register under the Factories Act. Indian manufacturing has become more and more capital intensive over the years. × Here, I take a brief look at what these data reveal for Gujarat. I am looking at the period from 1983 to 2013, but I also examine if the trends in the past fifteen years are any different from the preceding fifteen. At the national level, ASI data show that Indian manufacturing has become more and more capital intensive over the years. That is, the number of people employed per rupee of fixed capital used has been falling steadily. This trend has been commented on widely in the economics literature as well as the popular press, in the context of “jobless growth". Together with this rise in capital intensity, and partly as a consequence of it, has come increasing labour productivity and a falling share of value-added going to labour in the form of wages and salaries. Gujarat does not stand out as far as employment generation is concerned and if anything does a bit worse than the national average. × The trends for Gujarat are similar to the rest of India. However, some interesting and instructive differences also emerge. First, the general trend towards increasing capital intensity is much sharper for Gujarat compared to the all India average or comparable states like Karnataka. So, while in 1983, 63 jobs were created per rupee of fixed capital, by 2014 this was down to less than 5 jobs. The comparable numbers for India are 59 and 8, and for Karnataka are 70 and 8. Most of the increase in capital intensity has happened in the 1980s and 1990s, with the trend being relatively flat in the 2000s. This has happened nationally. So, Gujarat does not stand out as far as employment generation is concerned and if anything does a bit worse than the national average. Second, likely as a result of the increasing capital intensity there has been an increasing divergence of labour productivity on the one hand, and wages and salaries on the other hand. Labour productivity refers to value added per employee. The relationship between productivity and employee wages and salaries tells us how much ordinary people have benefited from increases in productivity. While in 1983, 63 jobs were created per rupee of fixed capital, by 2014 this was down to less than 5 jobs. × In the case of Gujarat, adjusting for inflation, annual emoluments (wages and salaries) per person went from ~ INR 47,000 in 1983 to ~ INR 96,000 in 2014 while productivity went from ~ INR 91,000 to ~ INR 750,000 in the same thirty-year period (amounts are in 2004-05 rupee values). That is productivity increased eight-fold while earnings of labour only doubled. This divergence has accelerated over time, particularly during the BJP’s tenure. This divergence between productivity and earnings is observed all over India but is much higher for Gujarat than the national average. Another measure of how much industrial growth and development have benefited ordinary people is the labour share of value-added, i.e. the proportion of value-added accruing to workers in the form of wages and salaries. The nature of changes occurring in the manufacturing sector in India, particularly the increasing capital intensity of production, has meant a steadily falling labour share. In Gujarat while productivity increased eight-fold, earnings of labour only doubled. × In Gujarat, the labour share has fallen from 36 per cent in 1982-83 to 18 per cent in 2015. The national average trend is from 40 per cent to 25 per cent. For Karnataka, the numbers are 38 per cent to 30 per cent. This again shows that Gujarat’s industrial development has been much more anti-labour than the all-India average. One possible counter-point is to say that even if the labour share is lower in Gujarat, the level of wages may be higher due to higher productivity. But here too the story is not as clean. In 2014- 2015, the latest year for which data are available, annual emoluments per person employed in Gujarat were INR 229,868 per year (in current rupees) while the national average was INR 221,000 and the Karnataka figure is INR 246,222. So while Gujarat does a little better than the national average, it is by no means a star performer. Thus, both in terms of job creation, as well as earnings of industrial workers and employees Gujarat, performs either worse than or only slightly better than the national average. At least as far the organised manufacturing sector is concerned, development in Gujarat has benefited capitalists far more than ordinary people. (Disclaimer: The author writes here in a personal capacity).

Opinion: Is Gujarat's industrial performance spectacular?

<p>Last month the National Sample Survey Organization (NSSO), India&rsquo;s pre-eminent public data collection agency released a report right in time for some Independence Day deliberations. But it hardly got any press coverage anywhere, despite the fact that it deals with the condition of nearly 70 per cent&nbsp;of India&rsquo;s non-agricultural workforce. This is a report based on a survey of nearly three lakh enterprises all over the country in the informal manufacturing and service sectors.&nbsp;</p>

<p>The unorganised or informal sector refers to those millions of tiny businesses that employ a handful of workers each, or in many cases do not employ any hired workers at all, but operate only with family labour. Seventy years after Independence, the Indian economy remains dominated, in numerical terms by the informal sector.</p>

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<h5>111 million is a large number, nearly 70 per cent of the nonagricultural labour force of India.</h5>
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<p>The NSSO report estimates the number of such enterprises in manufacturing and services (that is, excluding agriculture and construction) at 6.34 crore. The estimated size of the workforce employed in this sector is 11.1 crore or 111 million. It is important to emphasise that these are the estimates based on the sample survey. As is well-known, small informal businesses are hard to investigate. So, despite the best efforts of the NSSO (and it is widely known to be one of the best at the job it does) in reality the numbers may be much higher. In any case, 111 million is a large number, nearly 70 per cent of the nonagricultural labour force of India. And it has increased from 108 million in 2010 (the previous survey round). Of the 111 million, 36 million are in manufacturing, 39 in trade and 36.5 in other services.&nbsp;</p>

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<h5>The majority of the non-agricultural workforce in India reports being self-employed and this fact has not changed for decades.</h5>
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<p>Interestingly, of the over 6 crore enterprises in this sector, 84 per cent do not report employing any hired workers and this proportion has remained more or less constant over the past 30 years. Such firms account for 62 per cent of all workers in this sector. In other words, the majority of the non-agricultural workforce in India reports being self-employed and this fact has not changed for decades.</p>

<p>In this backdrop, let us consider the statement made by BJP President Amit Shah earlier this year, that the government would not be able to provide jobs to everyone who needs or wants one, but would rather encourage self-employment. Self-employment is, in fact, already the default option for anyone who cannot secure a job. So this statement does not amount to saying much.</p>

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<h5>In the informal sector, a family of even three members (say a husband-wife team with a child) that works together running a shop, a restaurant, a workshop, etc. earns only INR 8000 per month even today.</h5>
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<p>The most important part of the report is the data on earnings in the informal sector. If we look at the enterprises that work only with family labour, the report shows that the earnings of such enterprises (measured as Gross Value Added or receipts minus non-wage expenditures) are on average INR 95,753 per year or roughly INR 8000 per month. The good news is that this number has increased substantially, at least in nominal terms, since 2010, when it was INR 57,883. But the absolute value is still low. What it means is that in the informal sector, a family of even three members (say a husband-wife team with a child) that works together running a shop, a restaurant, a workshop, etc. earns only INR 8000 per month even today. What about hired workers in this sector? The report estimates their earnings to be INR 87544 per year or around 7300 per month. Very similar to self-employed workers.</p>

<p>What is the reason for such low earnings? A typical answer is because these workers are not very skilled and the businesses are not very productive. In fact, there is no shortage of skills in the informal sector. What they lack is formal certification of their skills, because most workers are informally trained. And as for productivity, the situation is similar to that of farmers who often fail to capture the value of what they produce because of their vulnerable position in a supply chain dominated by more powerful actors such as fertilizer and seed companies, and big retailers. In the informal manufacturing and service sector too, intense competition and a weak position in the supply chain result in informal businesses failing to capture most of the value they produce. Thus, appearing to be of low productivity and earning a pittance.</p>

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<h5>This very large section of our workforce does not earn enough to be in the income tax net either from the wage or the business income end.</h5>
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<p>Needless to say, this very large section of our workforce does not earn enough to be in the income tax net either from the wage or the business income end. Further, many transactions still occur in cash. There are many reasons for this, two important ones being that banking is expensive for low amounts of money and that these workers are not treated with respect in banks.&nbsp;</p>

<p>The Modi government&rsquo;s response to the persistent informal and cash-based nature of the economy has been to force formality by measures such as demonetisation and the Goods and Services Tax. These are meant to ensure that such economic activity also becomes visible to the government and can be monitored and taxed.&nbsp;</p>

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<p>Unfortunately, the NSSO survey cannot help us understand the effect of demonetisation on this sector because it was conducted from July 2015 to June 2016. But, it is telling that to date no comprehensive survey has been carried out by the government to assess the extent of the damage to the informal economy due to demonetisation. I know from my own conversations with the handloom and power loom weavers in Banaras that business was at a standstill for several weeks in November and December. And its effects are still being felt because losses forced many weavers to sell assets, including machines, to survive. On the heels of demonetisation came the confusion and shock of GST.&nbsp;</p>

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<h5>The most important one is to give the informal sector the infrastructure it needs to flourish, building functional cooperatives that improve the bargaining power of small producers, ensuring effective government support at least equal to what big businesses receive, and so on.</h5>
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<p>In fact, the Modi approach is misguided on several levels. First, these measures are authoritarian, nonfederal, and undemocratic. Second, the economics behind them is unsound. Third, there are many better ways to ensure that the government tax base widens and transactions become formal. The most important one is to give the informal sector the infrastructure it needs to flourish, building functional cooperatives that improve the bargaining power of small producers, ensuring effective government support at least equal to what big businesses receive, and so on.</p>

<p>But let us step back for a bit. This August 15th marks the 70th anniversary of India&rsquo;s independence. That is seven decades of policy-making with the aim of creating a modern Indian economy. The early development planners and economists in the 1950s spoke of the elimination of the small-scale economy that later came to be called the informal sector. Textbooks commonly referred to it as a transient phenomenon, soon to be replaced with large, modern firms. What happened? How come, even after decades of both planning and market-led growth, the better part of our workforce is still self-employed in tiny businesses and earns half of what a peon in a government office earns?</p>

<p>Plainly, the policies that were followed, both during the planning and the post-reform periods have not worked. But a nation-wide serious debate on both these failures has not occurred. It is in no political party&rsquo;s interest to conduct such a debate because they have no imagination other than what has been tried already.&nbsp;</p>

<p>&nbsp;</p>


Though India has barely made the shift to big industries, the informal businesses are failing to prosper because of intense competition and a weak position in the supply chain.

Last month the National Sample Survey Organization (NSSO), India’s pre-eminent public data collection agency released a report right in time for some Independence Day deliberations. But it hardly got any press coverage anywhere, despite the fact that it deals with the condition of nearly 70 per cent of India’s non-agricultural workforce. This is a report based on a survey of nearly three lakh enterprises all over the country in the informal manufacturing and service sectors. The unorganised or informal sector refers to those millions of tiny businesses that employ a handful of workers each, or in many cases do not employ any hired workers at all, but operate only with family labour. Seventy years after Independence, the Indian economy remains dominated, in numerical terms by the informal sector. 111 million is a large number, nearly 70 per cent of the nonagricultural labour force of India. × The NSSO report estimates the number of such enterprises in manufacturing and services (that is, excluding agriculture and construction) at 6.34 crore. The estimated size of the workforce employed in this sector is 11.1 crore or 111 million. It is important to emphasise that these are the estimates based on the sample survey. As is well-known, small informal businesses are hard to investigate. So, despite the best efforts of the NSSO (and it is widely known to be one of the best at the job it does) in reality the numbers may be much higher. In any case, 111 million is a large number, nearly 70 per cent of the nonagricultural labour force of India. And it has increased from 108 million in 2010 (the previous survey round). Of the 111 million, 36 million are in manufacturing, 39 in trade and 36.5 in other services. The majority of the non-agricultural workforce in India reports being self-employed and this fact has not changed for decades. × Interestingly, of the over 6 crore enterprises in this sector, 84 per cent do not report employing any hired workers and this proportion has remained more or less constant over the past 30 years. Such firms account for 62 per cent of all workers in this sector. In other words, the majority of the non-agricultural workforce in India reports being self-employed and this fact has not changed for decades. In this backdrop, let us consider the statement made by BJP President Amit Shah earlier this year, that the government would not be able to provide jobs to everyone who needs or wants one, but would rather encourage self-employment. Self-employment is, in fact, already the default option for anyone who cannot secure a job. So this statement does not amount to saying much. In the informal sector, a family of even three members (say a husband-wife team with a child) that works together running a shop, a restaurant, a workshop, etc. earns only INR 8000 per month even today. × The most important part of the report is the data on earnings in the informal sector. If we look at the enterprises that work only with family labour, the report shows that the earnings of such enterprises (measured as Gross Value Added or receipts minus non-wage expenditures) are on average INR 95,753 per year or roughly INR 8000 per month. The good news is that this number has increased substantially, at least in nominal terms, since 2010, when it was INR 57,883. But the absolute value is still low. What it means is that in the informal sector, a family of even three members (say a husband-wife team with a child) that works together running a shop, a restaurant, a workshop, etc. earns only INR 8000 per month even today. What about hired workers in this sector? The report estimates their earnings to be INR 87544 per year or around 7300 per month. Very similar to self-employed workers. What is the reason for such low earnings? A typical answer is because these workers are not very skilled and the businesses are not very productive. In fact, there is no shortage of skills in the informal sector. What they lack is formal certification of their skills, because most workers are informally trained. And as for productivity, the situation is similar to that of farmers who often fail to capture the value of what they produce because of their vulnerable position in a supply chain dominated by more powerful actors such as fertilizer and seed companies, and big retailers. In the informal manufacturing and service sector too, intense competition and a weak position in the supply chain result in informal businesses failing to capture most of the value they produce. Thus, appearing to be of low productivity and earning a pittance. This very large section of our workforce does not earn enough to be in the income tax net either from the wage or the business income end. × Needless to say, this very large section of our workforce does not earn enough to be in the income tax net either from the wage or the business income end. Further, many transactions still occur in cash. There are many reasons for this, two important ones being that banking is expensive for low amounts of money and that these workers are not treated with respect in banks. The Modi government’s response to the persistent informal and cash-based nature of the economy has been to force formality by measures such as demonetisation and the Goods and Services Tax. These are meant to ensure that such economic activity also becomes visible to the government and can be monitored and taxed. On the heels of demonetisation came the confusion and shock of GST. × Unfortunately, the NSSO survey cannot help us understand the effect of demonetisation on this sector because it was conducted from July 2015 to June 2016. But, it is telling that to date no comprehensive survey has been carried out by the government to assess the extent of the damage to the informal economy due to demonetisation. I know from my own conversations with the handloom and power loom weavers in Banaras that business was at a standstill for several weeks in November and December. And its effects are still being felt because losses forced many weavers to sell assets, including machines, to survive. On the heels of demonetisation came the confusion and shock of GST. The most important one is to give the informal sector the infrastructure it needs to flourish, building functional cooperatives that improve the bargaining power of small producers, ensuring effective government support at least equal to what big businesses receive, and so on. × In fact, the Modi approach is misguided on several levels. First, these measures are authoritarian, nonfederal, and undemocratic. Second, the economics behind them is unsound. Third, there are many better ways to ensure that the government tax base widens and transactions become formal. The most important one is to give the informal sector the infrastructure it needs to flourish, building functional cooperatives that improve the bargaining power of small producers, ensuring effective government support at least equal to what big businesses receive, and so on. But let us step back for a bit. This August 15th marks the 70th anniversary of India’s independence. That is seven decades of policy-making with the aim of creating a modern Indian economy. The early development planners and economists in the 1950s spoke of the elimination of the small-scale economy that later came to be called the informal sector. Textbooks commonly referred to it as a transient phenomenon, soon to be replaced with large, modern firms. What happened? How come, even after decades of both planning and market-led growth, the better part of our workforce is still self-employed in tiny businesses and earns half of what a peon in a government office earns? Plainly, the policies that were followed, both during the planning and the post-reform periods have not worked. But a nation-wide serious debate on both these failures has not occurred. It is in no political party’s interest to conduct such a debate because they have no imagination other than what has been tried already.

After 70 years Independence, Indian economy remains dominated by the informal sector

<p>Hit hard by the demonetisation move, the manufacturing sector plunged into contraction in December -- the first shrinkage in a year -- as the cash crunch took its toll on new business orders and factory output, a monthly survey showed today.</p>

<p>The Nikkei Markit India Manufacturing Purchasing Managers&#39; Index (PMI) -- which measures manufacturing sector activity -- fell to 49.6, down from 52.3 in November.</p>

<p>The index slipped below the crucial 50 threshold -- which separates contraction from expansion -- for the first time since December 2015. This also marked the biggest month-on-month decline in the index in over eight years or since November 2008 when the global economy had slipped into a severe downturn after the Lehman bank collapse.</p>

<p>&quot;Having held its ground in November, following the unexpected withdrawal of Rs 500 and 1,000 bank notes from circulation, India&#39;s manufacturing industry slid into contraction at the end of 2016,&quot; said Pollyanna De Lima, Economist at IHS Markit and author of the report.</p>

<p>Lima added that &quot;cash flow issues among firms also led to reductions in purchasing activity and employment&quot;.</p>

<p>Survey participants widely blamed the withdrawal of high-value rupee notes for the downturn as cash shortage in the economy reportedly resulted in fewer levels of new orders.</p>

<p>Businesses also highlighted challenging conditions in external markets, with a fall in new businesses from abroad ending a six-month long growth.</p>

<p>Though December saw a mild decline in manufacturing output, the average reading for October-December remained in the &quot;growth terrain&quot;, suggesting a positive contribution from the sector to overall GDP in the third quarter of 2016-17, the survey said.</p>

<p>Several researchers and economists have lowered their near-term GDP growth forecasts in the wake of the demonetisation move, though there is a broader view that the decision would help the economy grow faster in the longer run.</p>

<p>&quot;With the window for exchanging notes having closed at the end of December, January data will be key in showing whether the sector will see a quick rebound,&quot; Lima added.</p>

<p>The report said the higher prices paid for a range of raw materials made average cost burden increase for the 15th straight month in December, with the rate of inflation picking up since November.</p>

<p>(PTI)<br />
&nbsp;</p>


This also marked the biggest month-on-month decline in the index since November 2008, when the global economy collapsed

Hit hard by the demonetisation move, the manufacturing sector plunged into contraction in December -- the first shrinkage in a year -- as the cash crunch took its toll on new business orders and factory output, a monthly survey showed today. The Nikkei Markit India Manufacturing Purchasing Managers' Index (PMI) -- which measures manufacturing sector activity -- fell to 49.6, down from 52.3 in November. The index slipped below the crucial 50 threshold -- which separates contraction from expansion -- for the first time since December 2015. This also marked the biggest month-on-month decline in the index in over eight years or since November 2008 when the global economy had slipped into a severe downturn after the Lehman bank collapse. "Having held its ground in November, following the unexpected withdrawal of Rs 500 and 1,000 bank notes from circulation, India's manufacturing industry slid into contraction at the end of 2016," said Pollyanna De Lima, Economist at IHS Markit and author of the report. Lima added that "cash flow issues among firms also led to reductions in purchasing activity and employment". Survey participants widely blamed the withdrawal of high-value rupee notes for the downturn as cash shortage in the economy reportedly resulted in fewer levels of new orders. Businesses also highlighted challenging conditions in external markets, with a fall in new businesses from abroad ending a six-month long growth. Though December saw a mild decline in manufacturing output, the average reading for October-December remained in the "growth terrain", suggesting a positive contribution from the sector to overall GDP in the third quarter of 2016-17, the survey said. Several researchers and economists have lowered their near-term GDP growth forecasts in the wake of the demonetisation move, though there is a broader view that the decision would help the economy grow faster in the longer run. "With the window for exchanging notes having closed at the end of December, January data will be key in showing whether the sector will see a quick rebound," Lima added. The report said the higher prices paid for a range of raw materials made average cost burden increase for the 15th straight month in December, with the rate of inflation picking up since November. (PTI)

Demonetisation: India's manufacturing sector contracts for first time in a year

British business activity sank in July to its lowest level since April 2009, a survey revealed today in the first indication of economic contaction since the shock European Union (EU) exit vote.<br />
<br />
The preliminary composite purchasing managers&#39; index (PMI) by the research Markit group sank to 47.7 points in July, down from 52.4 in June.<br />
<br />
A reading under 50 indicates contraction in private sector activity.<br />
<br />
The survey -- regarded as a key early indicator of economic activity before official statistics are published -- is the first major evidence of economic fallout after Britons voted to leave the EU in a referendum on June 23.<br />
<br />
&quot;July saw a dramatic deterioration in the economy, with business activity slumping at the fastest rate since the height of the global financial crisis in early-2009,&quot; said Chris Williamson, chief economist at Markit.<br />
<br />
&quot;The downturn, whether manifesting itself in order book cancellations, a lack of new orders or the postponement or halting of projects, was most commonly attributed in one way or another to Brexit,&quot; he added.&nbsp;<br />
<br />
<strong>Third quarter opens on weak footing in Britain&nbsp;</strong><br />
<br />
Markit added that the survey signalled a 0.4-per cent contraction in the British economy in the third quarter, or three months to September.<br />
<br />
&quot;Much of course depends on whether we see a further deterioration in August or if July represents a shock-induced nadir,&quot; added Williamson.<br />
<br />
&quot;Given the record slump in service sector business expectations, the suggestion is that there is further pain to come in the short-term at least.&quot;<br />
<br />
Markit added the survey showed that the economy had &quot;opened the third quarter on a weak footing&quot;.<br />
<br />
Output and new orders fell in both the manufacturing and service sectors during July.<br />
<br />
&quot;A number of firms linked this to ongoing uncertainty pre- and post-EU referendum, with reports especially prevalent among service providers,&quot; added Markit in a statement.<br />
<br />
&quot;The downturn in services was also more marked than that seen in manufacturing. Services activity and new orders both fell at the quickest rates in over seven years.&quot;<br />
<br />
The collapse in the British pound following the Brexit vote had meanwhile pushed up manufacturers&#39; costs.<br />
<br />
&quot;The downside of the exchange rate was a steep rise in manufacturers` input prices, mainly due to higher import costs,&quot; it said.<br />
<br />
&quot;The rate of purchase price inflation hit a five-year record, with the extent of the acceleration among the steepest in the survey history.&quot;<br />
<br />
The data was published after the International Monetary Fund slashed its global and British economic growth forecasts for 2016 and 2017 earlier this week -- and blamed uncertainty created by Brexit. Britain`s new finance minister Philip Hammond meanwhile declared this week that it was up to the Bank of England (BoE) to respond to the economic &quot;shock&quot; arising from Brexit.<br />
<br />
<strong>&#39;PMI data could persuade policymakers to act&#39;&nbsp;</strong><br />
<br />
Williamson added today that the new PMI data could persuade policymakers to act.<br />
<br />
&quot;With policymakers waiting to see hard data on the state of the economy before considering more stimulus, the slump in the PMI will provide a powerful argument for swift action,&quot; noted Williamson.<br />
<br />
The BoE kept its key interest rate at 0.50 percent last week, confounding expectations for a reduction -- but flagged a possible August cut in response to Brexit.<br />
<br />
Policymakers also signalled that the exact size and nature of any stimulatory measures would be determined at next month`s monetary policy gathering, due on August 4.<br />
<br />
The impact of Brexit on the eurozone was much more muted, however, with Markit&#39;s preliminary composite PMI for the 19 nations that share the euro dipping to 52.9 points, which was however an 18-month low.<br />
<br />
Williamson said the eurozone economy &quot;showed surprising resilience in the face of the UK&#39;s vote to leave the EU and another terrorist attack in France.&quot;<br />
<br />
(AFP)&nbsp;

The survey is the first major evidence of economic fallout after Britons voted to leave the EU

British business activity sank in July to its lowest level since April 2009, a survey revealed today in the first indication of economic contaction since the shock European Union (EU) exit vote. The preliminary composite purchasing managers' index (PMI) by the research Markit group sank to 47.7 points in July, down from 52.4 in June. A reading under 50 indicates contraction in private sector activity. The survey -- regarded as a key early indicator of economic activity before official statistics are published -- is the first major evidence of economic fallout after Britons voted to leave the EU in a referendum on June 23. "July saw a dramatic deterioration in the economy, with business activity slumping at the fastest rate since the height of the global financial crisis in early-2009," said Chris Williamson, chief economist at Markit. "The downturn, whether manifesting itself in order book cancellations, a lack of new orders or the postponement or halting of projects, was most commonly attributed in one way or another to Brexit," he added. Third quarter opens on weak footing in Britain Markit added that the survey signalled a 0.4-per cent contraction in the British economy in the third quarter, or three months to September. "Much of course depends on whether we see a further deterioration in August or if July represents a shock-induced nadir," added Williamson. "Given the record slump in service sector business expectations, the suggestion is that there is further pain to come in the short-term at least." Markit added the survey showed that the economy had "opened the third quarter on a weak footing". Output and new orders fell in both the manufacturing and service sectors during July. "A number of firms linked this to ongoing uncertainty pre- and post-EU referendum, with reports especially prevalent among service providers," added Markit in a statement. "The downturn in services was also more marked than that seen in manufacturing. Services activity and new orders both fell at the quickest rates in over seven years." The collapse in the British pound following the Brexit vote had meanwhile pushed up manufacturers' costs. "The downside of the exchange rate was a steep rise in manufacturers` input prices, mainly due to higher import costs," it said. "The rate of purchase price inflation hit a five-year record, with the extent of the acceleration among the steepest in the survey history." The data was published after the International Monetary Fund slashed its global and British economic growth forecasts for 2016 and 2017 earlier this week -- and blamed uncertainty created by Brexit. Britain`s new finance minister Philip Hammond meanwhile declared this week that it was up to the Bank of England (BoE) to respond to the economic "shock" arising from Brexit. 'PMI data could persuade policymakers to act' Williamson added today that the new PMI data could persuade policymakers to act. "With policymakers waiting to see hard data on the state of the economy before considering more stimulus, the slump in the PMI will provide a powerful argument for swift action," noted Williamson. The BoE kept its key interest rate at 0.50 percent last week, confounding expectations for a reduction -- but flagged a possible August cut in response to Brexit. Policymakers also signalled that the exact size and nature of any stimulatory measures would be determined at next month`s monetary policy gathering, due on August 4. The impact of Brexit on the eurozone was much more muted, however, with Markit's preliminary composite PMI for the 19 nations that share the euro dipping to 52.9 points, which was however an 18-month low. Williamson said the eurozone economy "showed surprising resilience in the face of the UK's vote to leave the EU and another terrorist attack in France." (AFP)

British business activity sinks after EU divorce, eurozone economy shows resilience: Key survey

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