The GDP figures for Q2 hardly took anyone by surprise as the July-September period was dominated by political events overshadowing the economy and a few measures that were announced with regards to FDI and reducing subsidies were to be discussed in Parliament and to become effective afterwards. The movement of one or two indicators in H1 has the potential of boosting the economic health of the country by giving a fillip to demand, which justifies the capacity augmentation that is being planned. Mining and quarrying have grown by nearly 1% against a 3% drop in HI of the previous year. The construction sector has grown by nearly 1.8 times compared with last year, which is reassuring. Financing, insurance and real estate sectors have grown by more than 10% in the current fiscal.
Taken together, the trend implies that the spurt in domestic savings has found outlets in real estate purchase and although infrastructure construction has not shown much activity, construction of residential and commercial complexes has seen an uptrend. Investment indicated by gross fixed capital formation as a percentage of GDP at market prices remains almost steady at 33.3%, but the rate of growth of investment has sharply come down from 9.7% to 2.3% in the current fiscal. The key concerns are the much slower growth of GDP in manufacturing (0.5%) and much less progress in electricity, gas and water supply (4.8% against 8.9%). Slow growth in two of these steel-intensive segments has adversely affected steel consumption, which has shown 4.2% growth in the first eight months of the current year.
The consumption of reinforcement bars, wire rods and rounds has been marginally lower than the previous year in the first 7 months of the current fiscal. Structural consumption has gone up, which is in tune with the increase in the construction sector. Slow growth in the manufacturing sector (1%) has been caused by no growth in machinery and equipment segments, sharp negative growth (-25%) in the electrical equipment segment and poor growth in the transport equipment segment (-1.1 %). Despite these factors, the consumption of flat steel has grown by 8.8% during the period, primarily due to the high growth in consumption in CR coils and CR sheets, electrical sheets and pipes.
Over April-November 2012, the production of automobiles increased by 4.8%. While production of passenger cars went up by 9.6%, that of commercial vehicles rose by 2.7%. This