India's Manufacturing Activity

In December, India's manufacturing activity experienced its slowest growth rate in 12 months due to increased competition and price pressures, as highlighted by an HSBC Purchasing Managers’ Index (PMI) survey conducted by S&P Global.

Key Highlights

• The PMI eased to 56.4 in December from 56.5 in November, indicating a slight dip in manufacturing activity.
• Despite the December slowdown, the average PMI for 2024 improved to 57.5 compared to 56.8 in 2023, suggesting a stronger annual performance.
• The rate of expansion in new orders hit its lowest for the year, hinting at potential weaker growth in future production.
• A PMI reading above 50 signifies expansion in the sector.

Factors Influencing Growth

• Advertising and positive client appetite played a crucial role in supporting sales.
• Favorable demand was the primary driver for production growth.

Challenges Faced

• Price pressures intensified, with a significant rise in container, material, and labor costs since November.
• The increase in selling prices was one of the highest in approximately 20 years.

Employment and Output Outlook

• Manufacturing employment grew for the tenth consecutive month, with hiring reaching a four-month high in December.
• Approximately 10% of companies increased their workforce, while less than 2% reduced jobs.
• The outlook for 2025 remains positive, with manufacturers expecting a rise in output despite ongoing concerns about inflation and competitive pressures.

Ministry of Skill Development and Entrepreneurship (MSDE) Initiatives

The MSDE is collaborating with five central ministries to assess their specific demand for a skilled workforce, aligning training initiatives with sector-specific and demand-specific needs under the Skill India mission.

Objective and Strategy

• Provide short-term training, reskilling, and upskilling to create a skilled workforce.
• Conduct skill gap analysis across various schemes to project the demand over the next five years.
• Plan to initiate training by the financial year 2025-26.

Benefits

This initiative aims to fast-track skill training in the country, ensuring schemes are implemented by professionally trained personnel, thereby improving effectiveness and achieving desired outcomes.

Training Programs

• Short-term training: 200-600 hours.
• Recognition of Prior Learning (RPL) based up-skilling: 30-132 hours, under the Pradhan Mantri Kaushal Vikas Yojana (PMKVY 4.0).

Involved Ministries

• Ministry of Tourism
• Ministry of Health and Family Welfare
• Ministry of Housing and Urban Affairs
• Ministry of Consumer Affairs, Food and Public Distribution
• Ministry of Social Justice and Empowerment

Specific Schemes Requiring Skilled Manpower

• SWAGATAM under the tourism ministry.
• Municipal solid waste management under the housing and urban affairs ministry.
• Food safety and standards authority of India.
• Managing PM Kisan Samridhi Kendra.
• NAMASTE scheme (National Action for Mechanised Sanitation Ecosystem) for promoting safe sanitation practices.
  • The NAMASTE initiative aims to formalize workers engaged in hazardous cleaning and promote mechanized and safe cleaning methods.

Rural Employment Demand in India

Increase in Work Demand under MGNREGS

• Work demand under the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS) rose for the second month in December.
• About 25.8 million people sought work, an increase of 7.4% from the previous year.
• This included 21.58 million households, showing an 8.3% rise.
• The rise was attributed to an unfavourable base effect and the return of farm laborers post-Kharif harvest.

Factors Affecting Work Demand

• Work demand had decreased from November 2023 to October 2024 due to improved job prospects.
• High monsoon rains in the previous year encouraged a shift to farming.
• After harvesting summer crops, laborers returned to seek work in December.

Economic Indicators and Future Outlook

• Rural consumption demand remained resilient, as indicated by increased sales of two-wheelers, three-wheelers, and tractors.
• The finance ministry forecasted economic growth to reach 6.5% in FY25, up from 6% in the fiscal first half.

Summary of Fiscal Quarter Data

• In fiscal first three quarters, 229.8 million individuals from 183 million households demanded NREGS work.
• Work demand increased by 19.7% for individuals and 17.5% for households in December compared to November.