India’s manufacturing sector grew at its slowest pace in three months last month, hit by power and raw material shortages, a business survey showed yesterday.
The HSBC India Manufacturing Purchasing Managers’ Index (PMI), a key measure of factory production, eased to 54.7 last month from 56.6 in February.
A reading above 50 indicates the sector is expanding, while a reading below 50 suggests contraction.
Growth is expected to have come in at 6.9 percent for the fiscal year that ended on Saturday, down from 8.4 percent the previous year.
“Activity in the manufacturing sector expanded at a slower pace in March led by a moderation in output and order growth, although export orders accelerated,” Leif Eskesen, HSBC’s chief economist for India, said.
While manufacturers reported a marked rise in new business received last month, power and raw material shortages appear to have limited their ability to take on new business, HSBC said.
The government has forecast that India will grow 7.6 percent in the new financial year to March 31, 2013, but this is far below the 8 percent to 9 percent growth seen in much of the past decade.
The manufacturing survey showed input prices rose substantially last month, which manufacturers aimed to pass on to customers by raising their prices, raising concerns over inflation.
“Inflation was firm and upside risks remain, which will keep the Reserve Bank of India cautious about easing monetary policy,” Eskesen said.