More sectors clock ‘excellent’ growth during first quarter

At a time when government data give mixed signals of an economic recovery, a survey by the Confederation of Indian Industry’s Associations’ Council (CII ASCON) sees early signs of a revival.

Of the 93 sectors surveyed, the proportion that recorded “excellent” growth (faster than 20 per cent) during the April-June quarter of 2015-16 was higher, at 16.1 per cent, than the 7.1 per cent in the corresponding quarter of the last fiscal.

The survey respondents represented a wide range of sectors comprising small, medium and large enterprises and, in many cases, accounted for around 70 per cent of the total industry output in their respective sectors.

“What is especially significant is that there are fewer sectors anticipating negative growth and there has been a significant and perceptible positive movement in percentage points recorded by many of the sectors which were in moderate and negative growth category a year ago,” said Naushad Forbes, chairman, CII ASCON, and president-designate, CII.

The proportion of sectors that reported a growth rate of less than zero fell to 23.7 per cent from nearly 27 per cent in the corresponding quarter of the previous year.

However, the share of sectors that witnessed a “high” growth rate (of 10-20 per cent) reduced significantly to 9.7 per cent from 14.3 per cent a year ago.

Survey calls for reviving stalled projects, easing interest rates

The industry survey has suggested revival of stalled projects, de-bottlenecking of supply side linkages and the easing of interest rates as the most significant steps to bolster growth.

Margin pressure from stiff competition, competition from imports, a shortage of power, a high regulatory burden, a lack of domestic and export demand, a shortage of skilled labour and talent and a high tax burden have been cited as the most important constraints by more than 50 per cent of the respondents of the survey.

The study has found that more sectors have clocked “excellent” growth during the first quarter of the current financial year, though government data show there is no clear pattern regarding industry performance as the Index of Industrial Production and the Index of Eight Core Industries move from depicting acceleration to deceleration on a monthly basis.

Drilling deeper, the survey found that the capital goods industry was the worst off — with growth rates reported in the industry being either “moderate” or “negative”. Consumer non-durables had the highest proportion of companies with “excellent” growth rates, followed by the basic goods sector.

“The performance of the consumer durables and non-durables sectors, an indicator of consumer spending, is also not very encouraging as a majority of the sectors, especially in the consumer durables segment, have estimated growth in the moderate category,” the survey report said.

Correction

The graphic accompanying this article has been altered to correct factual errors.