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Indian Factory Output Hits Two-Year High

Indian factory output expanded at its quickest pace in two years last month, a key survey has shown. And according to the Financial Express, this was a sign that proved the economy is picking up under new Prime Minister Narendra Modi.

Banking giant HSBC explained in a report released Friday that its purchasing managers index (PMI) increased to 54.5 points in December from 53.3 in November.

The survey, viewed as a “harbinger of industrial expansion and economic health” by the Financial Express, as a reading of more than 50 points suggests expansion, while anything below indicates reduction.

Pranjul Bhandari, chief economist at HSBC, said, “Manufacturing activity momentum accelerated to a two year high in December, led by a healthy increase in new orders,” according to the Financial Express.

The survey also suggested a continuing harsh fall in input prices such as oil could create space for some rate cuts in 2015.

Earlier this month, the Reserve Bank of India suggested that it could lower interest rates if price pressures continued to calm.

However, the Financial Express explained that the survey had a cautious note on the pace of recovery in Asia’s third largest economy, saying it was critical that demand for investment goods outworked demands for consumer goods.

Modi’s nationalist party won the general election by a landslide in May, but his government was struggling to step up the pace of reforms in order to resurrect the faltering economy.