New Delhi: Spurred by three stimulus packages announced in the last two quarters, the Indian economy is showing nascent signs of revival, according to data from a survey carried out by business lobby Confederation of Indian Industry, or CII.
While CII said there were “marginal signs of recovery”, it also cautioned against reading too much too soon as on a year-on-year basis all sectors grew slower.
The survey carried out by its Association of manufacturing, agriculture and service councils, or Ascon, reported that 18.75% of the 80 sectors tracked showed high growth last fiscal compared with 15.63% in the first nine months. High growth is defined as between 10% and 20%.
The number of sectors reported contraction in the same period was down 3 percentage points to 30%.
Positive outlook: SAIL’s plant at Bhilai in Chhattisgarh. Pig iron, a key input in steel manufacture, moved from negative growth to moderate growth between the third and fourth quarters of the last fiscal. Maitreyee Handique / Mint
Industry watchers view the numbers as forward looking as they are reported about six weeks ahead of the government’s Index of Industrial Production and so act as a bellwether. Data pertains to about 65% of the country’s industrial output, and is from CII and its affiliated associations.
“There are certainly signs of revival,” said R. Seshasayee, chief executive of Ashok Leyland Ltd, the country’s second largest commercial vehicle maker. Truck makers have been hit hard in the last six months but Seshasayee said that he’s seen revival in demand even for heavy trucks where demand has been “muted in the last few months”.
Export-dependent? sectors continue to be under pressure, he said. Indeed, half of the 22 export sectors surveyed reported negative growth in the report.
Significantly, pig iron, which is a key input in making steel, moved from negative growth to moderate growth between the third and fourth quarters of the last fiscal year. As a result, steel output also registered moderate growth. Fertilizers also fell in this category of moderate growth.
But when compared with the fiscal ended 31 March 2008, some of the differences in growth rates were stark. There was a sharp fall in industries and services—from 15.38% to 6.25%—that expanded by over 20%. And those that registered negative growth nearly doubled to 30%.
Even so, there were two industries that stood out. Mobile phone services recorded a 34.24% growth rate in the year gone by. India, the world’s second largest phone services market by customers, has some 400 million such subscribers.
Electric two-wheeler sales rose by about 36% but over a low base. Last year there were an estimated 100,000 electric scooters sold in India but manufacturers fear that in the absence of incentives from the government, sales might stagnate.
Another outlier was asbestos cement, production of which increased by 21%.