Manufacturing PMI Hits 7-month Low

Manufacturing activity in India slowed to a seven month low in September as lower demand dampened output.
The Reserve Bank of India (RBI) cut its policy rate by a more than expected 0.5 percentage points to provide a demand stimulus to the economy. The Nikkei Manufacturing Purchasing Managers' Index declined to 51.2 in September from 52.3 in August.
A reading above 50 on this survey based index indicates expansion.
The tepid car sales in September seem to validate the lower reading.Market leader Maruti Suzuki reported 6.8% rise in sales in September. The official data has showed improving manufacturing in recent months. According to the Index of Industrial Production (IIP) numbers, manufacturing output rose 4.7% in July. The data for August will be released on October 12. India's GDP growth slowed to 7% in the quarter to June from 7.5% in the previous quarter. The government has already spent nearly 40% of its capital budget for the year by the end of August, hoping to restart the investment cycle.
The RBI has downgraded its growth estimate for the fiscal to 7.4% from 7.6%.
The PMI numbers suggest the second quarter was better than the previous one with an average of 52.1, marginally ahead of 51.8 for the April-June quarter. The new orders sub-index of the PMI dropped to a three month low. The sub-index for output fell to its lowest since May 2014.
The survey confirmed a subdued inflation outlook, validating the RBI's decision to cut rates.
The sub-index for input prices declined to its lowest since February 2009 because of lower commodity prices. Most manufacturers passed on these cuts to consumers.

Somewhere in Jharkhand....

Swachh Bharat

India's hardline response to Pakistan on Kashmir

Bluntly calling Pakistan a “prime sponsor of terrorism“, India asked Islamabad to vacate the part of Kashmir it has occupied, virtually laying down a new paradigm for any resolution of the issue.
“Pakistan is not primary victim of terrorism but of its own policies. It is in fact the prime sponsor of terrorism. Blaming neighbors is not a solution“, spokesman of the ministry of external affairs Vikas Swarup said in a series of tweets on Wednesday .
New Delhi's sulfurous response came after PM Nawaz Sharif launched at UN the familiar lament about Pakistan being a victim of terrorism. In response to Sharif's statement that “many generations of Kashmiris have lived their lives under occupation“, Swarup retorted, “Pak PM gets foreign occupation right, occupier wrong. We urge early vacation of Pak occupied Kashmir“.
On Sharif 's call for India to “demilitarise“ Kashmir and give the state the right of self-determination, Swarup replied, “To de-militarise Kashmir is not the answer, to de-terrorise Pakistan is.“
India's hardline response, probably the toughest in decades, came after Sharif laid down Pakistan shop-worn narrative about being a victim of terrorism. India's hardline response, probably the toughest in decades, came after Sharif laid down Pakistan shop-worn narrative about being a victim of terrorism, despite openly harboring many well-known and UN and US designated terrorists and terror groups.
Despite this well known pattern, previous Indian governments had been reluctant to call out Pakistan and humiliate it so publicly , preferring discreet peace moves to walk it back from its widely-known sponsorship of terrorism. The BJP government appears to have decided it will call Pakistan's bluff and expose it before the world community .
In a more elaborate response -following Swarup's tweets -exercising India's right to reply , New Delhi accused Pakistan of misusing the UN “to distort reality and portray a false picture of the challenges in our region,“ by presenting itself as a primary victim of terrorism.
“In truth, it is actually a victim of its own policies of breeding and sponsoring terrorists.Seeking to mask its activities as though an outcome of domestic discontent in the Indian State of Jammu & Kashmir carries no credibility with the world,'' said the statement by First Secretary Abhishek Singh.
Referring to Sharif 's allegations about ceasefire violations and exchanges of fire along the Line of Control and the International Boundary , the Indian statement said ''the world knows that the primary reason for firing is to provide cover to terrorists crossing the border. It needs no imagination to figure out which side initiates this exchange.“
“It is not uncommon for states, when confronted with serious challenges, to shift responsibility on others. That is the case with Pakistan and terrorism, reflecting the inability to recognize that this is a home grown problem that has begun to bite the hand that fed it. We agree that terrorism has underlying causes ­ in this case, poverty of wisdom and ignorance of consequences,'' the statement, arguably the strongest response and the most elaborate repudiation to Pakistan's narrative on the Kashmir issue, said.
The statement also cautioned the world about the consequences of terrorism originating from Pakistan. “The heart of the matter is a state that regards the use of terrorism as a legitimate instrument of statecraft. The world watches with concern as its consequences have spread beyond its immediate neighbourhood.All of us stand prepared to help, if only the creators of this monster wake up to the dangers of what they have done to themselves,“ it said.
The Modi government seems to want to challenge the old Pakistani narrative about unrest only in Jammu and Kashmir, by highlighting Pakistan's occupation of a part of Kashmir, including Gilgit and Baltistan. By many accounts, people in that region have far less rights than those in India's J&K, where only a small section of malcontents in a narrow strip of Kashmir Valley backed by Pakistan want to secede. There is also a systematic pogram against non-sunni sects in PoK that has not caught international attention.
Going by the initial response to Pakistan's effort to raise the Kashmir issue, it has backfired, particularly in the light of its hosting of terrorists and terror groups which are often highlighted in its own media.India's strong response, quite different from that of the previous dispensation, could well up the ante.
''It marks a clear departure of the Manmohan Singh style of diplomacy: continue with acts of terror on our soil and we will not play cricket with you. The shift is not merely rhetorical but also once of substance,'' said Sumit Ganguly , a South Asia scholar at Indiana University in Bloomington, adding that it remains to be seen if there is suitable follow up in the future.
Pakistan's claims of Indian aggression on the border or interference inside Pakistan have also lacked credibility and have no takers in the international diplomatic circuit, including in the US.

Core sector growth slows to 2.6% in August

Growth in the key core sector remained sluggish in August, pointing to weakness in the industrial sector and reinforcing the need for moderate interest rates and reforms to sustain the growth momentum.
Data released by the commerce and industry ministry showed the eight core sectors -spanning steel, coal, crude oil, natural gas, refinery products, fertilizers, cement and electricity -grew an annual 2.6% in August. That's slower than the 5.9% expansion in the year ago month but marginally stronger than the previous month's 1.1% growth. The eight core sectors account for 38% of the index of industrial production (IIP).

Ambani Brothers join hands for 4G

The once-warring Ambani brothers, Mukesh and Anil, have decided to come together to launch fourth-generation (4G) mobile phone services by the year-end, signalling a consolidation in the fragmented Indian telecom market. Terming it a “virtual consolidation“, Reliance Group chairman Anil Ambani said at the Reliance Communications (RCom) annual general meeting, that he was tying up “trading and sharing“ of spectrum with Mukesh Ambani-led Reliance Jio (RJIO) for offering 4G services.RCom is India's fourth-biggest mobile phone carrier by subscribers. Ambani, however, did not disclose any equity transaction at this juncture. “I'm grateful to my elder brother Mukeshbhai for his unstinted support and guidance,“ he said. Invoking his father , Ambani said; “With this partnership my father will be a very happy man in heaven as is my mother here“. Mother Kokilaben and wife Tina were present at the AGM.
The Ambani brothers started collaborating in 2013 after a long period of bitterness that followed the much-publicized split of 2005 in the erstwhile Reliance empire founded by their late father Dhirubhai Ambani. One of the more significant deals they struck was when RJIO decided to share RCom's extensive inter-city and intra-city infrastructure of nearly 520,000 km of optic fibre pairs and 45,000 towers. The aggregate value of the deal was pegged at Rs.12,000 crore.
Not only does the latest development symbolize a formal joining of hands between the two companies but it also has wider ramifications for the fiercely competitive Indian telecom industry where Sunil Mittal-led Airtel, Kumar Mangalam Birla-helmed Idea and multinational giant Vodafone are set to slug it out, that too at a time when margins are getting squeezed.
What could give a booster shot to the combined might of the Ambani telecom arms is the ongoing talks between Anil Ambani and Russian billionaire Vladimir Yevtushenkov's Sistema, to merge its Indian operations with Reliance Communications through a stock swap deal, thus creating a new telecom power house. The proposed deal with Sistema will extend the validity of spectrum in the 850 MHz band in eight key circles by 12 years -all the way up to 2033.
“RCom's discussions to merge SSTLMTS India (Sistema) operations through a stock swap are at an advanced stage and we are expecting to finalize and announce this in the course of the next few weeks,“ said Ambani, adding that the merger would help it in eight circles and add to the spectrum it already holds. Fierce competition among 12 carriers have pushed tariffs to among the lowest globally even as they have spent billions of dollars to buy telecom airwaves to meet surging demand for vo ice and data services.
The start of Jio's services, toward the end of the year, will mark the return of Mukesh--the driving force behind Reliance Infocomm -in telecom after a decade. Jio has spent over Rs.1 lakh crore ($16 billion) to launch 4G bundled voice and data services in the world's second-biggest market by number of customers.

Drought Surcharge introduced in Maharashtra