London: PM Modi says, Indians have become more aspirational under his rule

Jan 24: India’s economy appears to be shaking off a slump, as activity in the services and manufacturing sectors expanded for a second straight month in December.

The needle on a gauge measuring so-called animal spirits signaled the economy may be taking a turn for the better, as five of the eight high-frequency indicators tracked by Bloomberg News came in stronger last month. The dial was last at the current position in August.

“Animal spirits” is a term coined by British economist John Maynard Keynes to refer to investors’ confidence in taking action, and the gauge uses the three-month weighted average to smooth out volatility in the single-month numbers.

The nascent recovery would need a helping hand, with expectations building that Finance Minister Nirmala Sitharaman will provide some stimulus when she presents the budget Feb. 1. Official forecasts show the economy is set to expand at 5% in the year ending March 2020 -- the weakest pace in more than a decade.

Here are the details of the dashboard:

Business Activity

The dominant services index rose to the highest level in five months in December as improving new work orders helped boost activity. The seasonally adjusted Markit India Services PMI index climbed to 53.3 from 52.7 in November, helping post a strong end to the calendar year.

India’s manufacturing PMI also rose -- to 52.7 from 51.2 a month ago -- boosted by the fastest increase in new orders since July. A reading above 50 means expansion while anything below that signals contraction.

The uptick in business confidence was accompanied by a rise in inflationary pressures, the survey showed. That trend may keep monetary policy makers from resuming interest-rate cuts anytime soon, leaving most of the heavy-lifting to boost growth with the government.

“The relative stability in macro indicators over the past two months suggests that the worst is behind, but the recovery is likely to be prolonged,” said Teresa John, an economist at Nirmal Bang Equities Pvt. in Mumbai. “Still, sluggish growth and rising inflation indicate that India may well remain in stagflation for most of 2020.”

Exports

Exports remained a laggard, falling 1.8% in December from a year ago. The drag was mainly because of a fall in export of engineering goods, which constitute a third of India’s non-oil exports.

Capital goods imports continued to contract and was lower by 16.5% year-on-year in December after a 22% drop in November. This was the seventh consecutive month of continuous decline, underscoring the weakness in the capex cycle, according to IDFC First Bank.

Consumer Activity

Weakness in demand for passenger vehicles persisted, with local sales falling 1.2% in December from a year ago, according to the Society of Indian Automobile Manufacturers. That capped the worst yearly passenger vehicle sales on record. A Nielsen study on demand for fast-moving consumer goods showed volume growth dropped to 3.5% in the last quarter of 2019 from 3.9% in the same period of 2018.

Funding conditions held out hope, showing considerable improvement in December, according to the Citi India Financial Conditions Index. Credit growth remained tardy though, with demand for loans rising at a slower 7.1% pace from a year ago compared with a nearly 8% growth in November.

Industrial Activity

Industrial output rose for the first time in four months in November. The pick up was broad-based, led by mining, manufacturing and electricity. Mining and manufacturing, in particular, posted a second month of sequential growth. Production of consumer goods also rose after a few months of contraction.

The index of eight core infrastructure industries, which feeds into the index of industrial production, however, declined 1.5% in November from a year ago -- the fourth straight month of contraction. That was on account of shrinking production of electricity, steel, coal, natural gas and crude oil. Both the core sector and industrial output numbers are reported with a one-month lag.

More and more Indians have become better prepared in the last one month, as far as stocking of their ration, medicine or money is concerned, according to the IANS-CVoter COVID-19 Tracker.

With the second leg of the lockdown half way through and Prime Minister Narendra Modi saying it's a long haul, 57.2% respondents said they have less than three weeks of stock while 43.3% said they have a stock that will last beyond that

However, if one breaks into weeks, most respondents said they are prepared for a week's time. 24.5% respondents said they have ration, medicine or money to last a week. This is closely followed by 21.9 % respondents saying they are ready for a month.

Meanwhile, 20.4 % said they are ready for a couple of weeks. There are 15.8 % who said they are ready for more than a month with food, ration and medicine. A tiny 5.6 % said they are ready with three weeks of stock.

However, there is 12.3% who still seem to live on the edge with less than a week's preparation.

But, the biggest takeaway from the IANS-CVoter COVID-19 Tracker is that in the last one month, a massive segment of society realised that the fight is long and the preparation should also be to last that long.

o put things into context, on March 16 when the tracker started, a whopping 77.1% said they have stock to last for less than a week. More than a month later on April 21, that number jumped to just 12.3%, which essentially means, people have become better prepared for a long-hauled lockdown period.

Similarly, on April 21, a sizable 21.9% respondents claimed they are ready with ration and medicine that will last them a month. On March 16, not even one respondent could claim they have a month's stock. In fact till March 22, just ahead of the announcement of the first lockdown, no respondent the IANS-CVoter tracker said that they have a month's preparation.

Similarly, when the tracker started, 9.9% said they simply ‘don't know'. As on April 21, that number is a big zero.