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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.

New Delhi, Jan 10: The Supreme Court while hearing petitions challenging restrictions in Jammu and Kashmir on Friday stated that the right to access the internet is a fundamental right under Article 19 of the Constitution of India.

"It is no doubt that freedom of speech is an essential tool in a democratic setup. The freedom of Internet access is a fundamental right under Article 19(1)(a) of the Constitution," a two-judge bench headed by Justice N V Ramana stated while reading out the judgment.

The top court said that Kashmir has seen a lot of violence and that it will try to maintain a balance between human rights and freedoms with the issue of security.

It also directed the Jammu and Kashmir administration to review the restrictive orders imposed in the region within a week. “The citizens should be provided highest security and liberty,” the apex court added.

The top court made observations and issued directions while pronouncing the verdict on a number of petitions challenging the restrictions and internet blockade imposed in Jammu and Kashmir after the abrogation of Article 370 in August last year.

The Supreme Court had on November 27 reserved the judgment on a batch of petitions challenging restrictions imposed on communication, media and telephone services in Jammu and Kashmir pursuant to revocation of Article 370.

The court heard the petitions filed by various petitioners including Congress leader Ghulam Nabi Azad and Kashmir Times editor Anuradha Bhasin.

The petitions were filed after the central government scrapped Article 370 in August and bifurcated Jammu and Kashmir into two Union Territories -- Jammu and Kashmir and Ladakh. Following this, phone lines and the internet were blocked in the region.

The government had, however, contended that it has progressively eased restrictions.