Here’s more proof that all is not well with the Indian economy.
India’s exports in July contracted by 14.8% — the steepest fall in three years — over the same month in 2011 as orders from Europe, hit by sovereign debt worries and a wobbly political situation, shrank.
This has shown that exporters haven’t been able reap the advantage of the weakening rupee, which has slid to a record low.
A persistently weak rupee, however, has made imports costlier, widening the trade and current account deficits — a worrying sign for an economy that is slowing. Imports declined by 7.61% in July.
The Indian economy grew by 5.5% during April to June — down from 8% last year, as policy makers struggled for options to halt the slowdown.
Weakening export orders and sluggish output also dragged down Indian manufacturing growth in August.
The HSBC Purchasing Managers’ Index (PMI), a measure of factory production, fell to 52.8 in August from 52.9 in July, the weakest in nine months. The index, however, remained above 50, below which it indicates a contraction in the manufacturing sector.
“The momentum in the manufacturing sector eased further on the back of weak external demand and output disruptions caused by the major power failures in early August,” HSBC chief economist (for India and ASEAN) Leif Eskesen said.
RV Kanoria, president, Ficci said: “One of the main causes of concern is the need to bring back competitiveness in the economy and also to stimulate investments.”