Industrial activity disappoints, multiple agreements signed with France

Data releases during the week ended January 30, 2016 confirmed more of what is already known, but surprisingly, showed some green shoots of growth as well.

The RBI’s quarterly Order Books, Inventory and Capacity Utilisation Survey (OBICUS) of manufacturing companies, for the second quarter of 2015 (Q2 FY16), showed lower capacity utilisation and rising inventories to sales ratios. While capacity utilisation fell for the second consecutive quarter, inventories to sales ratio increased stayed at over 50% for the second consecutive quarter. There was also decline in order backlogs, possibly on continued weak demand. While industrial weakness persists, the date release also has a lag of over one 4 months, and we will have to watch for Q3 numbers as well to see any signs of pickup.

On the credit front, however, signs of revival have shown up in the past week. Foreign borrowings showed an over 20% growth on a year on year (yoy) basis in Q3 FY16, after declining for 5 quarters. Credit growth in December came in at 9.2%, faster than that seen in much of the past year, though a tad below growth during the corresponding period of the previous year. Categories like services and personal loans are actually showing accelerated growth compared to last year, though industrial credit remains sluggish.

Area under rabi crop continues to maintain some lag from the previous year, with coarse cereals still leading the way in terms of increase in area under coverage, while major rabi crops like wheat lag behind.

It was a rewarding policy week for India, as the visit by the French President to led to the signing of multiple agreements across sectors. From aircraft deals, to partnerships for smart cities and ramp up of renewable energy capacity, as well as higher education and culture, an entire gamut of areas of cooperation have been identified.

This is an Executive Summary of the Orbis Economics's weekly report - India Macro Weekly. To know about subscription, write to

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