Indian factory activity returns to modest growth in January - PMI | Reuters

BENGALURU Indian factory activity returned to modest growth in January, bouncing from a contraction in December triggered by the government's scrapping of high value banknotes, a business survey showed on Wednesday.Compiled by IHS Markit, the Nikkei Manufacturing Purchasing Managers' Index rose to 50.4 in January from 49.6. A reading above 50 indicates expansion.In a sign factories have started the year on a better footing, a sub-index measuring new orders also nudged back above the breakeven mark, with domestic demand driving the pace as export orders remained in contraction."January saw only modest increases in order books, production and buying levels, but the quick rebound will be welcome news to policymakers," said Pollyanna De Lima, economist at IHS Markit.

"Improving confidence among firms bodes well for the outlook, with the expansion in manufacturing output likely to pick up pace in coming months."Prime Minister Narendra Modi's demonetisation drive in November banned 500 and 1,000 rupee bills, removing 86 percent of cash in circulation, in a bid to fight corruption and tax evasion.

The cash crunch is expected to hurt the economy in the October-December quarter of 2016, with economists predicting growth slowing to a near 3-year lows of 6.5 percent.

In December, the Reserve Bank of India unexpectedly left its key policy rate unchanged at 6.25 percent, opting to wait before judging the full effects of the currency ban.But India's central bank is expected to go through with a rate cut in its meeting next week, with 29 of 46 economists in a poll conducted over the last few days expecting a 25 basis points cut. India's government will unveil its budget on Wednesday and is expected to try and boost economic growth through reducing personal income and corporate tax as well as higher public investment.

This story has not been edited by Firstpost staff and is generated by auto-feed.

Updated Date: Feb 01, 2017 22:01 PM

Also Watch

Social Media Star: Abhishek Bachchan, Varun Grover reveal how they handle selfies, trolls and broccoli
  • Monday, July 16, 2018 It's a Wrap: Soorma star Diljit Dosanjh and Hockey legend Sandeep Singh in conversation with Parul Sharma
  • Monday, July 16, 2018 Watch: Dalit man in Uttar Pradesh defies decades of prejudice by taking out baraat in Thakur-dominated Nizampur village
  • Monday, July 16, 2018 India's water crisis: After govt apathy, Odisha farmer carves out 3-km canal from hills to tackle scarcity in village
  • Sunday, July 15, 2018 Maurizio Sarri, named as new Chelsea manager, is owner Roman Abramovich's latest gamble in quest for 'perfect football'

Also See