India Manufacturing Activity Cools Off After Government Currency Move -- Survey

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By Anant Vijay Kala

NEW DELHI--A gauge of manufacturing activity in India retreated from a 22-month high in November, adding to concerns about an imminent economic slowdown caused by a cash shortage in the South Asian economy.

The seasonally-adjusted India Manufacturing Purchasing Managers' Index fell to 52.3 from 54.4 in October, survey figures released by IHS Markit and Nikkei showed Thursday. A figure above 50 indicates expansion while a reading below that signals contraction.

The lower reading will exacerbate concerns about the health of the South Asian economy after data released Wednesday showed growth, at 7.3% in the three months ended Sept. 30, fell short of economists' expectations, prompting some analysts to slash their GDP forecasts.

India's government last month withdrew about 86% of bank notes in circulation in the economy to crackdown on tax evaders and counterfeiters. The move dried up the flow of cash, bringing economic activity to a near-standstill.

"Although many surveyed companies commented that further disruption is expected in the near-term, the demonetisation of the rupee is anticipated to ignite growth in the long-run as unregulated companies leave the market," Ms. De Lima added.

Write to Anant Vijay Kala at

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