India's manufacturing activity expanded the fastest in five months in March, buoyed by a sharp uptick in production and new orders. The Nikkei India Manufacturing Purchasing Managers' Index rose to 52.5 in March, up from 50.7 in February and the highest since demonetisation in November last year.
Firms hired additional employees to cope with greater workloads.
A reading of more than 50 on the index indicates expansion while that below the benchmark denotes contraction. Incoming new orders expanded at a stronger pace, leading to quicker increases in production and input purchasing.
Impressive car sales in March and for 2016-17 showed Indian economy had bounced back sharply from the demonetisation disruption. Maruti Suzuki, India's largest car maker, sold more than 1.5 million cars during the fiscal, its highest ever.
Largely reflecting higher commodity prices, average input costs increased again. However, the rate of inflation slowed to the weakest in four months and was below the long run survey average.
Although both input costs and output charges increased further, inflation rates softened from those seen in February.
Retail inflation had risen to 3.65% in February after slowing to a five year low of 3.17% in January, below the Reserve Bank of India's target of 4%.