Exporters' body concerned over Services PMI contraction
Updated: Nov 07, 2013 03:50:00pm
New Delhi, Nov 7 (KNN) Expressing concern over the contraction in services PMI for the 4th consecutive month, exporters body Federation of Indian Export Organisations (FIEO), said that services are linked to and reflective of the real economy and indicates that the slowdown in economic growth is impacting this sector also.
The HSBC Services Purchasing Managers' Index (PMI), by Markit, slipped to 44.6 in September from 47.6 in August, the lowest since April 2009.
President, FIEO expressed concern that while agriculture as a sector showed some improvement, both industry and services continued to slow down and looking at it from the demand side, consumption demand is hurting because of inflation and high interest rates. At the same time, investment demand is hurting because of general sentiment, the policy framework and the relatively high interest rates.
"Although there have been some positive developments such as Cabinet Committee on Infrastructure (CCI) clearing stalled projects, the issue is, that once these projects are cleared, when do they get off the ground and give the spin-off ancillary benefits which would have a multiplier effect," he said.
The total credit to the infrastructure sector witnessed a growth of 21 per cent during 2012-13; while bank credit grew by 19 per cent, IFCs showed a higher growth at 24 per cent.
"With the current environment in infrastructure sector remaining marked by weaker investor sentiment, besides a reduction in lenders' risk appetite, the growth in 2012-13 was largely led by disbursements to earlier sanctioned under-implementation projects as well as transitional loans given by the Power Finance Corporation (PFC) and Rural Electrification Corporation (REC) while fresh investment in infrastructure sector remained subdued," Ahmed said.
The FIEO chief reiterated the need to kick-start investments so as to bring economy to high growth track of early-2000s driven by investment demand which we need to resume.
For the export sector, priority lending window, subsidizing interest rates further given the possibility of further interest hikes, subsidies for warehousing/distribution outlets in markets of potential could be considered, he said. (KNN/SD)
The HSBC Services Purchasing Managers' Index (PMI), by Markit, slipped to 44.6 in September from 47.6 in August, the lowest since April 2009.
President, FIEO expressed concern that while agriculture as a sector showed some improvement, both industry and services continued to slow down and looking at it from the demand side, consumption demand is hurting because of inflation and high interest rates. At the same time, investment demand is hurting because of general sentiment, the policy framework and the relatively high interest rates.
"Although there have been some positive developments such as Cabinet Committee on Infrastructure (CCI) clearing stalled projects, the issue is, that once these projects are cleared, when do they get off the ground and give the spin-off ancillary benefits which would have a multiplier effect," he said.
The total credit to the infrastructure sector witnessed a growth of 21 per cent during 2012-13; while bank credit grew by 19 per cent, IFCs showed a higher growth at 24 per cent.
"With the current environment in infrastructure sector remaining marked by weaker investor sentiment, besides a reduction in lenders' risk appetite, the growth in 2012-13 was largely led by disbursements to earlier sanctioned under-implementation projects as well as transitional loans given by the Power Finance Corporation (PFC) and Rural Electrification Corporation (REC) while fresh investment in infrastructure sector remained subdued," Ahmed said.
The FIEO chief reiterated the need to kick-start investments so as to bring economy to high growth track of early-2000s driven by investment demand which we need to resume.
For the export sector, priority lending window, subsidizing interest rates further given the possibility of further interest hikes, subsidies for warehousing/distribution outlets in markets of potential could be considered, he said. (KNN/SD)
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