India manufacturing sector PMI shrinks for first time in 4-1/2 yrs

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Bleak PMI comes hard on the heels of data that showed India's economic growth at it slowest quarterly rate since global financial crisis.. Bleak PMI comes hard on the heels of data that showed India's economic growth at it slowest quarterly rate since global financial crisis..
SummaryAugust PMI contracted to 48.5 in August from 50.1 in July, lowest reading since March 2009.

record lows, leaving the Reserve Bank of India few options to support the economy.

The RBI's main defence of the rupee has rested on draining cash from domestic money markets and raising short-term interest rates, making loans to struggling businesses costlier and adding to growth concerns.

"The RBI will likely keep its liquidity tightening measures in place for a while still to help contain the depreciation of the currency," Eskesen added.

"Combined with the heightened macroeconomic uncertainty, this will continue to weigh on growth in coming months."

Raghuram Rajan, former chief economist at the International Monetary Fund, is set to take over as governor of the Reserve Bank of India this week. Economists in a separate Reuters poll said his immediate focus will be to bolster the currency.

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