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ASCON survey hints at economic revival

Neena Haridas in New Delhi

Despite the political instability that bogged the country for the last few months, the economy has shown definite signs of revival, according to a survey by a leading industry body.

About 44 industry sectors -- including key ones such as automobiles, automotive components, tyres, aluminium, cement, chemicals, pulp and paper, steel, telecom cables and telecom equipment -- have recorded improved production growth during the first six months (April-September 1999) of the current financial year in comparison with the corresponding period of the previous year.

This is significant because some of the sectors such as automobiles had shown poor growth last year due to negative growth trends in the passenger car segment.

On the flip side, 38 sectors have put up a poor show. Of these are significant sectors such as consumer electronics and durables, which have been star performers till now. The poor growth here is being attributed to lack of activity in these sectors after the marketing and sales frenzy during the cricket World Cup in June-July.

The ongoing Dasera-Diwali festive season is likely to increase demand.

The figures released by the Associations' Council of Confederation of Indian Industry or ASCON, have been calculated using information from member companies of the chamber and its 87 affiliated associations. In most cases, these member companies account for over 65 per cent of production in their respective sectors.

The survey included 120 industry segments, of which 21 are estimated to have grown by over 20 per cent, 42 by 10 to 20 per cent, 41 segments by less than 10 per cent and 16 are estimated to have recorded a negative growth rate.

The good news is that the domestic industry believes it will improve its current growth rate in the second half of the financial year with only three of the 120 industry segments projecting a downturn in their fortunes over the course of the next six months.

According to the CII, the industries are upbeat about the next six months as a result of increase in diesel sales, increase in both domestic and export cargo, growth in cement and steel production, increase in construction activity and no negative growth in the intermediate good sectors.

Among the star performers this year are: medium and heavy commercial vehicles wherein production grew by 63 per cent, car production (39 per cent), cement (20 per cent), software (56 per cent), auto components (25 per cent) and colour TVs (25 per cent).

In all, as per the estimates of the CII, 63 industry segments have grown by more than ten per cent during April-September 1999 over April-September 1998. In the automobile sector, which has clocked a 12 per cent growth, light commercial vehicles production has gone up by 8 per cent (-- 20 per cent during April-September 1998), car production by 39 per cent (--3 per cent), multi-utility vehicle production by 3 per cent (-- 20 per cent), motorcycle production growth has gone down to 23 per cent (27 per cent), moped production by 4 per cent (8 per cent) and three-wheelers by 6 per cent (--15 per cent).

Scooter production growth has, however, declined by 4 per cent as against a growth of 7 per cent during April-September ’98.

In the consumer electronics sector, colour TVs grew by 25 per cent (26 per cent), audio products by 28 per cent (15 per cent), clocks by 22 per cent (30 per cent), watches by 22 per cent (30 per cent) and B&W TVs by -- 2.5 per cent (0 per cent). Refrigerator production is up by 10 per cent (22 per cent), air-conditioners by 16 per cent (30 per cent), washing machines by 8.5 per cent (30 per cent) and water coolers by 10.5 per cent (12 per cent).

Steel production has gone up by 6.5 per cent during April-September 1999 as compared to a 1 per cent growth during April-September 1998, though there has been a slowdown in the sale of the product. As against a growth of 5.9 per cent in the first half of the last financial year, steel sales in the corresponding period of this financial year have grown by only 1.3 per cent.

The capital goods sector’s performance has been unsatisfactory with about eight segments of this sector recording a negative growth. In the white goods sector, while there has been a growth of more than 10 per cent, many segments have grown at a slower rate during April-September 1999 as compared to April-September 1998. The construction industry, too, has grown at a slightly slower rate of 10 per cent as against 12.5 per cent during April-September 1998.

Consumer durables, another sector which had been consistent in recording good performances, has suffered a comparatively bigger setback.

Refrigerator production growth has fallen to 10 per cent from 22 per cent while that of air-conditioners has fallen to16 per cent from 30 per cent.

Among the other key sectors on the growth path, the production growth has been 20.4 per cent in cement (5.4 per cent), 6.5 per cent in steel (1 per cent), 13.4 per cent in caustic soda (-- 11 per cent), 21 per cent in soda ash (-- 11 per cent), 10 per cent in diesel engines (1.5 per cent), 80 per cent in telecom cables (8.5 per cent), 10 per cent in telecom equipment (0), 15 per cent in aluminium (2.5 per cent) and 5.5 per cent in pulp and paper (-0.5 per cent).

Among the sectors that have suffered, the production growth was 12 per cent in alcoholic beverages (15 per cent), 5 per cent in boilers (18 per cent), -- 4.9 per cent in cigarettes and tobacco (1 per cent), 8 per cent in earthmoving, construction and mining equipment (13 per cent), -- 6.5 per cent in transformers (1.7 per cent), 2 per cent in lead and lead alloy (5 per cent), --10 per cent in malted food (3.6 per cent), -- 29 per cent in pig iron (-- 9 per cent) and --34 per cent in textile machinery (--17 per cent).

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