Mumbai: Green shoots of revival appear to have sprung up in key sectors of the economy in the past two months and economists have expressed different opinions about how quickly the economy can rebound from the slowdown. Passenger air traffic volumes climbed 11.2 per cent in November, the fastest pace in 2019 so far; while Maruti clocked the highest volumes since March this year of 139,133 in November. Overall passenger car sales slipped marginally by 0.84 per cent year-on-year in November, and experts believe both the sector and its market leader have managed to get past the worst slump in auto industry’s recent history when sales fell by more than 20 per cent in April-September.Fuel demand rose over 10 per cent in November mainly driven by higher consumption of petrol and diesel. Bitumen consumption indicated increase in construction of roads. Maruti’s domestic sales have grown every month since August while coal production and rail freight have also started improving. On Tuesday, Bank of America-Merrill Lynch upgraded Maruti to a ‘buy’ and raised its target price to Rs 8,650 from Rs 7,540. The brokerage said that the worst of the volume slump appears to be over and predicted 10 per cent volume growth in both FY21 and FY22.“After three months of material supply disruptions to the economy, which have compounded the demand slowdown, some sectors are starting to show a normalisation in activity levels,” Rahul Bajoria, chief economist at Barclays, said in a report. Called “Silver lining peeking through growth clouds”, Bajoria said that while growth will likely remain below trend, “we see emergent signs that sectors such as mining, freight and, eventually, power generation will start to improve sequentially. We believe discretionary demand is no longer contracting, albeit a sustainable pickup in growth remains some quarters away.”Shubhada Rao, chief economist of Yes Bank , also expressed cautious optimism though she expected the third quarter to remain subdued.Management commentaries across sectors remained mixed with FMCG and auto companies turning less sanguine about a recovery in the secondhalf of the current fiscal year while infrastructure companies remained cautiously optimistic on account of government thrust on infrastructure and a positive monsoon outturn driving rural demand for affordable housing. “Topline growth in Q4 FY20 could see some relative improvement as the economy is likely to gradually respond to measures rolled out by the government along with improved monetary policy transmission,” she added.Retail and home loan sales continue to grow in double-digits this year with Bajoria’s report saying that personal loan growth has picked up and is likely to boost consumption.But while all this is true, much of Indian industry remains mired in a deep slowdown. Two-wheeler and truck sales continue to fall and manufacturing output has plummeted as shown in recent IIP and core sector activity. While the Indian economy slowed to a six-year low at the end of the September quarter, government consumption expenditure grew 15.64 per cent and private consumption showed sequential improvement expanding by 5.1 per cent. The financial services sector grew 5.8 per cent.What remained a worrying trend was the gross fixed capital formation which represents investment demand in the country. It decelerated to 1 per cent in the September quarter after picking up in the preceding three months.“We believe Q3 was not the bottom of the GDP growth trajectory, and rather further pain is in store for Q4, when we expect GDP growth to slide further to 4.3 per cent y-o-y (vs 4.5 per cent in Q2),” said Sonal Varma, economist, Nomura Securities. "We project a subpar and rocky road to recovery, with GDP growth averaging 4.7 per cent y-o-y in FY20 and 5.7 per cent in FY21.'' A month-on-month analysis of the index of industrial production also showed that the contraction was milder in October than the month before. Capital goods output --- an indicator for investment revival --- contracted 21.9 per cent in October versus 20.7 per cent in September. Mining output contracted 8 per cent in October versus 8.5 per cent in September. Manufacturing output contraction was at 2.1 per cent in October versus a decline of 3.9 per cent in September. Consumer durables --- an indicator for pickup in demand – contracted 18 per cent versus a decline of 9.9 per cent. Electricity generation contracted 12.2 per cent, against a contraction of 2.6 per cent in September."Our BofAML India Activity Indicator points to the slowdown continuing. In response, we cut our FY20 growth forecast by a further 40 bps to 5.1 per cent. While we expect a shallow recovery to 5.2 per cent in the December quarter on base effects, the bottom has got deeper and longer,” said Indranil Sen Gupta, economist, Bank of America.What is worrying the street most is a higher probability of government slipping its fiscal deficit estimates after it exceeded its annual fiscal deficit target at 102.4 per cent and exhausted 112.5 per cent of the revenue deficit target in the April-October period.“Heavy dependence on continued strong government spend underscores key vulnerability of the growth outlook, particularly with government facing mounting fiscal strains,” said A Prasanna, economist, ICICI Securities Primary Dealership. “The monthly accounts of the central government released at around the same time as the GDP data continue to make for a grim reading.”