Purchasing Managers’ Index rises to 64 from 58.2 in May
Growth in the country’s services industry, including software and telecommunications, accelerated to a two-year high in June, maintaining pressure on the Reserve Bank of India (RBI) to raise interest rates and curb inflation.
The HSBC Holdings Plc and Markit Economics Purchasing Managers’ Index rose to 64 from 58.2 in May, according to an emailed report today. A reading above 50 indicates expansion.
RBI Governor D Subbarao is under pressure to add to last week’s quarter-percentage point increase in rates as consumer demand strengthens. Inflation may quicken by about a percentage point after the government on June 25 raised fuel prices, RBI estimates.
“India’s economy is still going strong,” Frederic Neumann, a Hong Kong-based economist at HSBC, said in the report. “The RBI needs to raise rates to put inflation back in the bottle and make the cork stick.”
The benchmark wholesale-price inflation rate rose to 10.16 per cent in May.
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RBI boosted the reverse repo and repo rates to four per cent and 5.5 per cent, respectively, in an unscheduled announcement on July 2, and added it would “take further action as warranted.” RBI’s next monetary policy meeting is scheduled for July 27.
| RISING NUMBERS > The growth has maintained pressure on RBI to raise interest rates and curb inflation > RBI is under pressure to add to its quarter-percentage point increase in rates as consumer demand strengthens > Inflation may quicken by about a percentage point after the government on June 25 raised fuel prices > The benchmark wholesale-price inflation rate rose to 10.16 per cent in May > RBI raised reverse repo and repo rates to 4% and 5.5%, respectively, in an unscheduled announcement on July 2 > The government partly freed fuel prices to cut subsidies, allowing refiners to charge about Rs 3.5 more on every litre of petrol > The government also permitted diesel prices to be raised by Rs 2 a litre > The country’s GDP expanded 8.6 per cent in the first quarter of this year from a year earlier, the fastest pace after China and Brazil among major economies |
Fuel prices
Prime Minister Manmohan Singh partly freed fuel prices to cut subsidies, allowing refiners to charge about Rs 3.5 more on every litre of petrol. The government also permitted diesel costs to be raised by Rs 2 a litre. Diesel pricing will eventually be freed, the government said.
The country’s $1.2-trillion gross domestic product expanded 8.6 per cent in the first quarter of this year from a year earlier, the fastest pace after China and Brazil among major economies. Industrial output jumped 17.6 per cent in April.
Growing demand prompted Tata Consultancy Services Ltd, the country’s largest software services provider, to offer more than 20,000 jobs in the year ended March 31, according to its website.
Wireless telecommunication companies added 16.3 million new customers in April, about three per cent more than the previous month.