The CII ASCON Industry Survey, which tracks the sectoral growth trends through the responses collected from sectoral industry associations, reveals moderate improvements in growth trends in terms of production in April-June FY19 over the corresponding quarter a year ago.
The survey classifies the growth trends across four broad categories, namely, excellent (>20 per cent), high (10-20 per cent), moderate (0-10 per cent) and low (<0 per cent).
Commenting on the performance of the sectoral growth trends, Mr Chandrajit Banerjee, Director-General, Confederation of Indian Industry (CII), said, “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. Further, fewer sectors are anticipating negative growth trends. This clearly points towards improvement in the economic environment. Further, an increase in capacity utilisation is clearly apparent.”
Out of the sectoral responses received for 70 sectors, the survey analysis reveals a sharp increase in the sectors witnessing ‘excellent’ growth (>20 per cent) in April-June (Q1) FY19, as compared to the same quarter a year ago. 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 percent (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 per cent) has come down substantially.
The share of sectors registering ‘high’ growth has inched up to 21.4 per cent in Q1 FY19 (15 out of 70) from 20 per cent (14 out of 70) in Q1 FY18 whereas the share of sectors witnessing ‘moderate’ (0-10 per cent) growth has improved somewhat to 44.3 per cent (31 out of 70) in the Q1 FY19 from 42.9 per cent (30 out of 70) in same period a year ago. The share of sectors witnessing ‘low’ growth (<0 per cent) 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.
On the production front, some of the sectors which have registered excellent growth include commercial vehicles (67.7 per cent), three-wheelers (61 per cent), construction equipment machinery (30.9 per cent), NP/NPK fertiliser (24.5 per cent), soya oil (22.7 per cent), tractors (20.1 per cent), sugar (223 per cent). On exports front, three-wheelers (75 per cent), tractors (28.6 per cent), commercial vehicles (41 per cent), 2 wheelers (30 per cent), sugar (291 per cent), rapeseed meal (89.6 per cent) have reported excellent growth.
In line with the improvements in the sectoral growth trends, capacity utilisation has also shown improvement in the surveyed quarter as compared to the previous quarter.
With respect to issues and concerns impacting growth, ‘competition from imports’ (50 per cent), ‘regulatory burden’ (42.9 per cent) and ‘lack of required infrastructure’ (41.7 per cent) 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 of the respondents expect the business situation in their respective sector to improve moderately whereas 31 per cent expect the situation to remain same in the next six months.
Overall, going forward the results point towards moderate improvements in growth trends supported by recovery in domestic demand and investment cycle in the coming quarters supported by consumption both in rural and urban fronts aided by favourable monsoon and moderation in inflation and the onset of festive season.
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 utilisation levels amidst domestic demand recovery. Further, a continuous push to structural reforms such as GST, PSU bank recapitalisation and time-bound insolvency resolution would also support the recovery, said a release.