Signs of economic recovery visible: CII

There are fewer sectors anticipating negative growth and there has been a significant and perceptible positive movement in percentage points recorded by many of the sectors which were in moderate and negative growth category a year ago

– Naushad Forbes, CII-ASCON chairman

New Delhi: The economy is showing signs of a turnaround, albeit moderately, on the back of continued policy actions, implementation and enhanced business and consumer confidence, says a CII ASCON survey.

The poll by CII Associations' Council (ASCON) for the April–June quarter, based on responses collected from sectoral industry associations that reveal a slight improvement in growth trends over the year-ago period.

CII ASCON chairman Naushad Forbes said the recent trend of slow but continuous progress in industrial growth is noteworthy. The survey's respondents have expressed their optimism in a further improvement in the near-term growth outlook helped by continued policy actions, implementation and enhanced business and consumer confidence.

"What is especially significant is that there are fewer sectors anticipating negative growth and there has been a significant and perceptible positive movement in percentage points recorded by many of the sectors which were in moderate and negative growth category a year ago," he said.

The industry associations which participated in the poll encompass wide range of sectors comprising of small, medium and large enterprises. In most of the cases, these account for approximately 70 per cent of the total industry output in respective sectors.

The survey tracked the estimated growth trends in terms of production, sales and exports for the April-June quarter. Of the 93 sectors surveyed, 16.1 per cent recorded excellent growth of more than 20 per cent during the first quarter of the current fiscal as compared to 7.1 per cent in the year-ago period.

However, the share of sectors that witnessed a high growth rate of 10 to 20 per cent has reduced significantly to 9.7 per cent in the April-June quarter from 14.3 per cent during the year-ago period.

Besides, the share of sectors reporting moderate growth has declined marginally to 51.7 per cent as compared to 51.8 per cent in the year-ago period. Moreover, the number of sectors recording negative growth has fallen from 26.9 per cent in the first quarter last year to 23.6 per cent this year.

Among the issues and concerns impacting growth, margin pressure from stiff competition, competition from imports, shortage of power, high regulatory burden, lack of domestic and export demand, shortage of skilled labour and talent and high tax burden have been cited as the most important constraints by more than 50 per cent of the respondents.

Besides, industrial relations, transport infrastructure bottlenecks, cost and availability of finance have been quoted as moderately important factors impeding growth. However, a sustainable recovery would depend on further improvement in domestic demand and investment revival.

While monetary easing would be beneficial, weak global demand, limited ability of the corporate sector to support revival in capex on account of over-leveraged balance sheets, moderation in rural demand along with stress due to impaired loans on bank balance sheets, will have a bearing on any upside. Respondents have stressed on the need for reviving investments in the economy to boost demand.