Indian, Chinese services sector growth at multi-month low

 

Riken Mehta
Moneycontrol Bureau

Growth in Chinese and Indian services sector, two of the world's fastest growing economies eased sharply in April, a survey by HSBC showed on Monday. The HSBC services Purchasing Managers' Index (PMI) of China fell to 51.1 in April from 54.3 in March while that of India fell to 50.7 in April from 51.4 a month earlier.

A reading above 50 suggests activity in the sector is growing, while the same below 50 indicates it is contracting.

"The rate of expansion of new orders in China was the weakest since August 2011. In April, staffing levels in the Chinese service sector also decreased for the first time since January 2009." said the HSBC China note.

China's annual economic growth slipped to 7.4 percent in the third quarter, slowing for seven consecutive quarters and leaving the economy on course for its weakest showing since 1999, said Reuters.

The HSBC India note says, "The pace of growth was the slowest in the current one-and-a-half year period of expansion. Total new business also rose at a weaker rate, although job creation was maintained."

Service sector accounts for almost 60 percent of India's GDP, so a slowdown in this sector is a bad sign for India. Last week data showed India's manufacturing activity growth also came to halt. RBI has also ruled out further easing of monetary policy and thrust now remains on the government to announce more measures to revive growth in the manufacturing and services sector.

Indian Government decontrols sugar: 7 things you need to know

Nasrin Sultana, Riken Mehta
Moneycontrol.com

Cabinet Committee on Economic Affairs (CCEA) on Thursday finally decided to decontrol sugar with certain riders. The sugar industry was the only industry left under the government control. It is learnt that the decontrol is largely in line with recommendations made by the Rangarajan committee . 

What does decontrol mean?

1. Decontrol means no government control. It will no longer force mills to sell sugar to the government at a discount and wont put a limit on the amount that they can sell in the open market.

2. No levy obligation on sugar mills for 2 years. Levy sugar is the amount of sugar set aside from the total production for Public Distribution System (PDS). In levy sugar system, millers were required to contribute 10 percent of their output to the Centre for running ration shops at cheaper rate. This costed the industry Rs 3,000 crore a year, an amount sugar industry will now be able to save.

3. Release order mechanism by which government directed sugar companies as to when, how much to release sugar now goes away.

4. The government will buy sugar from the open market at market rates and subsidise it to PDS. The government will pay the difference between ex-mill and PDS price. Cabinet fixed the price of levy sugar at Rs 13.50 a kg in 2002 and it was never changed since then. 

5. The government will bear Rs 5300 crore PDS sugar subsidy.

6. No hike in excise duty on sugar. Currently it is Rs 95 per quintal

7. Ex-mill sugar price will be capped at Rs 32 per kg for PDS

The government maintained that the decision will not lead to any rise in retail prices of sugar. However, it would double the government's subsidy burden to Rs 5,300 crore annually from about Rs 2,600 crore.