Indian economy on revival path: Survey

Oct 18 2012, 16:43 IST
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SummaryBCI rose to 160.3 in October. This is the third consecutive monthly growth.

India's business climate seems to be improving as latest trends, especially in demand for goods and services, indicate early signs of revival, according to a report.

The BluFin Business Cycle Indicator (BCI) – that reflects various macroeconomic trends on a monthly basis – rose to 160.3 in October, higher than 157.4 recorded in September.

This is the third consecutive monthly growth.

"The key factors contributing to the improvement in the BCI in October continues to be data related to the supply side of the economy especially intermediate goods and services, which are traditional leading indicators of the business cycle," it said.

However, a concern right now is the weakness in the consumer sector, financial information provider BluFin said today.

There has been a significant weakening in consumer metrics such as air travel and cell phone connections, it added.

The latest BCI – designed to ascertain turns in the business cycle – readings come at a time when the Indian economy is showing signs of a slowdown amid a host of issues, including global uncertainties and high inflation.

The index takes into account five broad areas – capital markets, foreign trade, policy, real economy and survey.

Going by October readings, there has been improvement in production across almost all basic and intermediate goods, including aluminium, copper, iron ore and cement. There are also indications of a rise in demand for basic goods like steel and rubber.

Revenues from foreign tourists have also shown some improvement, BluFin said.

Policy components too have shown improvement with rising government revenue collections and moderating non-plan expenditures, the report said.

It further said, "This continuous up-trend indicates the beginning of a new phase of growth in the Indian business cycle.

"However, the moderate growth rates in BCI over the last three months imply a slow recovery...The current trend in the BCI suggests that the Indian economy will follow suit within the next 2-3 months and come out of its current state of economic slowdown".

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