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Monday, March 16, 2015

SBI Composite Index rises to six-month high of 54.6 in March 2015

Manufacturing activity is getting robust with a positive growth for the third consecutive month 

The yearly SBI Composite Index for March 2015 inched up to 54.6 (Moderate growth) from 53.5 (Moderate growth) in February 2015, a 6-month high. Meanwhile, the Monthly Index that slipped from 52.6 in January 2015 (Moderate growth) to 47.6 in February 2015 (Low decline) has shown a month on month robust growth of 58.5 (High growth) in March 2015, highest in last 48 months. 

As per the SBI, the robust recovery in the month on month index may be attributed to seasonal factors as March sequential momentum is always higher. 

A robust SBI Composite Index for April 2015 (to be released aftermath 10 April 2015) may provide the vindication to sustainability of current IIP numbers, assuming February & March numbers are as per forecast. 

Revival in the Automobile sales, Capital Goods and Basic Goods production and possible upturn in the credit offtake to micro and small corporates segment, real estate, NBFCs and Construction sector indicates a possible sustainable recovery in the economic activity in coming months. Manufacturing activity is getting robust with a positive growth for the third consecutive month (Since November 2014). 

Meanwhile, SBI estimates show that an estimated Rs 65,000 crore could flow into the Aadhar linked accounts that can have a profound impact of enabling rural discretionary spending. 

This apart, the idea behind the recent policy changes for facilitating flow of infrastructure funds in the Budget should be extended further to ensure that the firms do not continue to suffer due to adverse impact of the lacuna in project implementation. 

The huge amount of claims due to cost and time overruns to be paid to these firms for reasons not attributable to the industry need to be released immediately. Presently, they have been needlessly blocked into disputes and time consuming litigations whereas the practice world over is to settle such matters through Dispute Resolution Boards so that the project work or the contractors do not suffer. 
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