Growth In Manufacturing Pushes India Amidst Top 3 Emerging Economies
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The manufacturing sector has witnessed steady progress due to which India has reached the third position amidst the key emerging markets. The manufacturing industry has seen the first year-on-year rise concerning exports in seven months. Also, the highest reading has been reflected concerning the purchasing managers’ index in more than eight years. India’s merchandise exports in September 2020 increased 6% year-on-year to $27.6 billion.

China has fared better in comparison to India; it has reported a 10% growth in its exports data for September 2020. All other emerging markets have displayed export levels which are far less when compared to the last year’s levels. The increase in exports has helped India to lift it’s manufacturing Purchasing Managers’ Index (PMI), which had resumed the expansion path already in August 2020. The PMI reading further increased to 56.8 in September, which is the highest since early 2012.

Activities, such as railway freight loading and automobile sales, have pointed towards reviving the economic activity in India. Improvements like these have resulted due to easing of localised restrictions concerning the pandemic, the slower spread of COVID-19, and the onset of festivals in India. 

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Meanwhile, the consumer price index-based inflation rate in India has increased to 7.3% in September 2020 in comparison with 6% in April 2020. Economists are of the opinion that inflation might start softening post-December with a dip in vegetable prices, weak demand, and easing of supply chain disruptions.

In September 2020, the stock market capitalisation increased by 2.5%, which is the highest among the emerging economies. Also, during this month, the Indian Rupee appreciated 1.5% versus the US Dollar. The markets performed positively partly because of the increased activity amongst both retail and high-net-worth-individuals (HNIs). However, the financial markets could witness volatility because the second wave of coronavirus might hit Europe and also the US presidential elections.

India’s COVID-19 situation is slowly improving; mobility is gradually resuming to the pre-pandemic time. Now, the focus lies in speeding up our economic recovery. India’s relative performance versus the key emerging markets will depend on its capacity to support domestic demand and make gains against the virus, even after the festive season ends.

For any clarifications/feedback on the topic, please contact the writer at

bhavana.pn@cleartax.in

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