India’s economic growth will improve further in the coming quarters due to recovery in domestic demand as also the investment cycle, according to the CII-ASCON Industry Survey. It said the demand and investment will be supported by better consumption patterns on account of favourable monsoon, moderation in inflation and the onset of festive season.
The survey tracked the performance of 70 sectors during the first quarter of the current fiscal, as against the year-ago period. “The ASCON Q1 FY19 Survey results reflect steady progress in economic growth. What is especially significant is that there has been a perceptible increase in the share of sectors recording higher growth,” CII Director General Chandrajit said.
The survey witnessed fewer sectors anticipating negative growth trends, which clearly points towards improvement in the economic environment, he said. It showed a sharp increase in the sectors witnessing ‘Excellent’ growth (>20%) in April-June 2018-19, over the year-ago period.
The share of sectors witnessing ‘Excellent’ growth has improved to 14.3 per cent (10 out of 70 sectors) in Q1 FY19 from 5.7 per cent (4 out of 70) in Q1 FY18. At the same time, the share of sectors recording ‘High’ growth and ‘Moderate’ growth has improved marginally while the share of sectors witnessing ‘Low’ growth (<0%) has come down substantially.
With respect to issues and concerns impacting growth, ‘Competition from Imports’ (50 per cent), ‘Regulatory Burden’ (42.9 pc) and ‘Lack of required infrastructure’ (41.7 pc) have been reported as the top three most important issues for the industry. Exuding optimism on the near-term growth outlook, 63.6 per cent respondents expect the business situation in their respective sector to improve moderately where as 31 per cent expect the situation to remain same in the next six months.
“The current expectations on the investment outlook for the next two months also points towards an impending recovery in investment cycle supported by improving capacity utilization levels amidst domestic demand recovery. “Further, a continuous push to structural reforms such as GST, PSU bank recapitalization and time-bound insolvency resolution would also support the recovery,” said the survey.
The share of sectors registering ‘High’ growth inched up to 21.4 per cent in the first quarter (15 out of 70) from 20 per cent (14 out of 70) in Q1 FY18 whereas sectors witnessing ‘Moderate’ (0-10 per cent) growth improved slightly to 44.3 per cent (31 out of 70) from 42.9 per cent (30 out of 70) in same period a year ago.
The share of sectors witnessing ‘Low’ growth has come down substantially to 20 per cent (14 out of 70) as compared to 31.4 per cent (22 out of 70) recorded in the same period previous year. “While the growth trends remain concentrated in the ‘Moderate’ category, a deceleration in the pace of de-growth suggests firming of the recovery in the economy,” the survey observed.
On the production front, some sectors which have registered excellent growth include Commercial Vehicles, Three Wheelers, Construction Equipment Machinery, Soya Oil, Tractors and Sugar. On exports front, 3 wheelers, tractors, commercial vehicles, two wheelers, sugar, rapeseed meal reported excellent growth.
Besides, 59.1 per cent of the respondents reported capacity utilisation in the range of 65-80 per cent whereas 13.6 per cent have reported capacity utilisation to be above 80 per cent.