The planners feel that growth in the industrial sector is anticipated to pick up from 3.5 per cent witnessed in April-August 1998. From September onwards, an upward movement of the industrial growth would emerge even though the growth may not push the industrial sector out of recession completely in the current fiscal.

"Recovery is perceptible in the second half particularly as the capital goods sector as well as the small scale sector have shown signs of picking up recently," said SR Hashim, member-secretary of the Planning Commission.

The small scale industries sector is, in fact, likely to record a commendable 12 per cent growth by the year end, Hashim said.

Another major indicator is the upswing in the performance of the commercial vehicle sector - one main yardstick of the economic health. Thi sector isalready showing signs of coming out of the woods.

A crucial factor, though, upon which the industrial recovery will depend is the creation of additional demand in the economy. Government expenditure is expected to rise substantially in the second half which will lead to additional demand, experts feel.

"Government expenditure would definitely go up now that state plans are already in place and ninth plan is set to be implemented soon," said Hashim."Bank rates are anticipated to be revised downwards by the end of the year even though the latest credit policy has left everything untouched," says a leading economist and director of RPG Foundation DH Pai Panandikar.

"With this the second half of the current fiscal would show an upward trend in industrial growth and would finally lead to recovery which is likely come about in the following year," he adds. "Expectations of good rabi crop is another factor that will bring about growth in all other sectors of the economy," said Hashim.

Along with this, asurge in government expenditure is expected to raise the liquidity in the economy through increased money supply.