Business Sentiment Rises Ahead of Elections

The MNI India Business Indicator accelerated to a 17-month high of 65.5 in March from 58.2 in February, well above the level in the same period a year earlier.

The latest increase suggests GDP is likely to pick-up slightly from the 4.7% growth rate seen in the final quarter of 2013.

There was a small pick-up in Production, while foreign demand for Indian goods and services increased as Export Orders rose to the highest since February 2013, when the series began.

A significant rise in Order Backlogs for the second month in a row and large draw down of inventories suggests demand has picked up.

Both Input Prices and Prices Received fell on the month, pointing to a continued decline in inflationary pressures, although both remained at elevated levels. High input costs continued to hurt companies but amid strong competition, many companies have lowered their prices.

Commenting on the latest survey, Chief Economist of MNI Indicators Philip Uglow said, “The recovery in India continued in March and our data is consistent with a slight pick-up in growth in the first quarter.”

“All eyes are now focused on the upcoming general election next month, with equity markets already pricing in a significant victory for BJP headed by Narendra Modi. While Modi seems to be the front-runner now, the elections can produce surprises and there are still eight weeks until the polls close.”

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