- Quick estimates for the index of industrial production find a growth of nearly 4 per cent in May 2002, compared to 1.7 in May 2001, with manufacturing accounting for 3.7 per cent and mining 7 per cent. Taking the use-based classification, consumer goods have grown 8.4 per cent, compared to 3 per cent in last May, capital goods by 1 per cent (last May was a negative four) and basic goods by 4.7 per cent (1.3). Infrastructure industries grew 6 per cent in April, after dropping 0.3 per cent in 2001-02. The NCAER expects industry to clock 6 per cent this fiscal, compared to 5 per cent last year.
- Consumer demand is looking up, triggering sales. Especially in old economy sectors like cement, fertilisers and steel, commercial vehicles and two-wheelers, and telecom and consumer finance. Buoyed by fast work in roads and housing, cement despatches rose 10 per cent last fiscal. Inventories in most industries, including cotton, are melting and prices of primary commodities and metals are on the upswing. According to the CII, these are clear signs of the business cycle recession bottoming out. Says Shrawan Nigam, economic advisor, ministry of commerce and industry: "The value of production in mining has gone up. Freight rates for trucks are rising. Exports, which were stagnant last fiscal, have gone up 10.5 per cent in April-May. And as manufacturing exports form two-thirds of total manufacturing, it'll prove a catalyst for the entire sector." With strong non-oil, non-gold-and-diamond import growth already under way, 2002-03 too promises to end with a current-account surplus.
- More good news on the supply side. Non-food credit offtake expansion, by Rs 12,000 crore in April-May, is the strongest since 1999-2000. Tax collections are better. Last season's good farm output, growing 6.9 per cent in last quarter, is expected to have a positive impact on rural demand for industrial products. Says Bhide: "Consumer non-durables should pick up growth early this year. Some consumer durables have done well last year (motorcycles, ACs, telecom instruments). Essentially, consumer goods should show good growth. Housing/construction did well last year. Impact sectors like cement and steel should do well this year too.But the revival is important ultimately for investment goods."
- Most important of all is the corporate mood. Explains Nigam: "If businessmen are optimistic, they exude confidence and spread it around." Indeed, CII's Ascon survey revealed businessmen actually talking of increasing jobs and investment. Says Rajiv Vij, MD, Templeton India: "Several corporates have used the slowdown over the past three-four years to substantially restructure their operations towards enhancing productivity and cost-efficiency." This has combined with rising public investment in infrastructure sectors, necessary for sustaining growth. However, as Vij says, "Most core sectors still have excess supply, but the demand-supply gap is narrowing resulting in better plant utilisations and higher price realisation (as in cement)."
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