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Growth bouncing back in India, sales start to recover

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Staff Writer | March 30, 2017
The Indian Sales Managers Index (SMI) for March, shows that the Indian economy is in recovery mode from December’s demonetisation policy.
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Economy in India   The March Headline SMI increased to 62.9
The abrupt impact of demonetisation hit small and medium size businesses hard as they predominately rely on cash based transactions, World Economics reports.

The March Headline SMI increased to an index level of 62.9 from 60.2 in unadjusted terms.

Sales growth, as reported by the unadjusted Sales Growth Index, has improved from 57.3 in February to 61.9 in March and coupled with a strong uptick in the Business Confidence Index suggests that the demonetisation impact has started to wear off.

Price inflation, as measured by the Prices Charged Index, remains very strong and just below the 4 year high reported in February.

Higher inflation in the consumer goods and services sectors, represented by the Prices Charged Index for Services (59.6), is pushing the valuation of the Rupee to even greater levels of undervaluation on the World Price Index (WPI) scale.

The WPI under valuation level for the Indian Rupee is currently -44%, using March data.

Businesses are taking advantage of the situation created by such an undervalued currency, with the majority of panel members feeling that the current FX level remains advantageous for their businesses, as expressed by the Rupee Strength Index growing to 57.5.

Overall, March SMI data suggests an improving situation for Indian businesses in March, with growing sales and enhanced levels of confidence.