But it is too early to predict a recovery, though last year's rise in agro output should mean a rise in rural incomes and this should translate into buoyant demand for consumer goods, notably, of non-durables. But it is difficult to be sure of consumer demand. Despite the clearance of pay panel dues, the consumer durables' output growth was just 3.5 per cent (down from 7.8 per cent in 1997-98).

The capital goods industry's performance was encouraging. Output growth nearly doubled to 10.2 per cent in 1998-99 hintingrevival of investment. True, evidence shows slack investment last year. But it would be wrong to infer that capital goods sector is facing inventory build-up. This industry produces against orders. Moreover, imports of capital goods did rise (as per available data) by 7 per cent in April-November last year.

Term lending bodies have raised funds for infrastructure lending. Currently several infrastructure bond issues are awaiting clarification whether gross or net income from infrastructure bonds will be tax-free. Revival of investment intention is in the air. Surveys on business confidence reflect a fall in pessimism. CII's 6-per cent industrial-growth projection this year is widely shared, though short of 6.6 per cent of 1997-98. A modest, but realistic expectation.