New Delhi: A pick-up in industrial growth in the last two months may not have gone far enough, says a survey carried out by business lobby Confederation of Indian Industry, or CII.
“Amidst optimism that the worst may be behind for the Indian economy, there are some major challenges that lie ahead for the economy,” Chandrajit Banerjee, director general of CII said in a press release.
Concerns remain: CII director general Chandrajit Banerjee. Rajkumar / Mint
CII, which projects economic growth for this fiscal at between 6.5% and 7%, said “industrial recovery is not complete” as there were large variations in growth rates among sectors.
As a result, there was an increase in sectors showing excellent growth, which the survey defines as above 20%, and in sectors registering negative growth. The number of sectors showing moderate growth fell from 32% to 28.6%. The survey looks at a total of 96 sub-sectors, varying from automobiles to industrial gases and fertilizers to power cables.
The number of high-growth sectors increased from 7% in April-June 2008 to 10.4% in the same period this year. “The concern is the increase in the percentage of sectors in the negative category to 39% this quarter, compared with 21.0% in Q1 FY2009,” Surinder Kapur, chairman of the CII manufacturing council, said.
The survey, carried out by CII’s association of manufacturing, agriculture and service councils, or Ascon, acts as a bellwether for manufacturing output reported by the Union government’s Index of Industrial Production, or IIP, usually reported with a lag of six weeks. Growth rates in the CII-Ascon survey are based on data from member firms of CII and its affiliated associations. These make up about 65% of total industry output in the country.
As companies cut back investments, firms producing capital goods have been hit hard. Some of the sub-sectors of capital goods have reported negative growth to the extent of minus 48%, according to the survey.
Reviving exports promises to be a significant challenge for the government. Exports have declined by an average of 23% since October. In April-June, the decline accelerated to 31%.