Showing the falling manufacturing sector’s condition in the country the SBI Composite Index, an indicator for tracking India's manufacturing activity, has registered a month-on-month decline to 48.3 (low decline) in February 2015 from 52.1 (moderate growth) in January 2015. However, the yearly SBI composite index for February 2015 inched up to 52.9 (moderate growth) from 52.1 (moderate growth) in January 2015, a two month high. As per the SBI’s composite index, a value of less than 42 means large decline while a value of 42 to 46 means moderate decline, 46 to 50 (low decline), 50 to 52 (low growth), 52 to 55 (moderate growth) and above 55 (high growth).
Though, SBI has noted that sharp contraction in the month-on-month index can be attributed to less number of working days in February as compared to January. The Index which captures two components of the manufacturing cycle - month-on-month and year-on-year-growth on a scale of 0 to 100 has also stated that revival in automobile sales, capital goods and consumer non-durables production and possible upturn in the credit offtake by large corporates segment highlights possible recovery in the economic activity in coming months.
However, on the flip side, it stated that the consumer durable sales have not yet bottomed out and the bank credit and deposit continue to remain sluggish. Though, benign wholesale as well as retail inflation accompanied by a lower cost of borrowing is expected to boost positive sentiment in the economy in coming months and possibly drive credit cycle and growth.
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