Saturday, Dec 14, 2002
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By Our Special Correspondent
The trend of industrial growth would continue to be upwards in the second half of the current fiscal according to a majority of the survey's respondents. Over half of the respondents stated that general business prospects for their company would improve over the next six months. While 41 per cent of the respondents felt that the same trends would continue, only 8 per cent felt they would experience a worsening in the general business prospects for their company. Sectoral analysis revealed that the capital goods and intermediate goods sectors would exhibit higher growth in the next six months. The survey found that the majority of the respondents were looking at fresh capital investments in the existing business unit. Fresh investments would be largely fed by the expectations of a pick-up in both domestic and international demand. However, most of the investments are expected to be capital intensive as 57 per cent majority of the respondents have also revealed that the level of employment is expected to remain constant over the next six months. Once again highlighting the critical role that reforms would have in propelling the growth rates in the economy, the respondents have said that poor domestic economic conditions and policies would be a significant deterrent to achieving higher levels of output. The survey has also revealed that on the infrastructure front, power remains a problem area. In spite of adequate liquidity, the high interest rates and reluctance to lend by banks continue to hamper easy access to finance. The survey notes that over the past six months the lack of orders and prevailing global and domestic economic and political scenario have been the primary factors limiting the level of output. On an index of 1-6, where 1 is the most limiting and 6 is the least limiting factor the average rating received by `lack of orders' and `domestic economic and political scenario' is 2.8 and 2.7 respectively indicating them to be the most limiting factors. On the infrastructure front power continues to be the most vexing problem for the industry in terms of infrastructure bottlenecks. On an index of 1-6 power has received a low average rating of 1.8. The high rate of interest is the most significant factor impeding the easy access to finance according to the survey. On a 6-point index it has received an average rating of 3. Reluctance exhibited by the banks to lend, limited access to global capital markets, procedural hassles and subdued equity and money markets are the other factors impeding the easy access to finance according to the respondents. On overall economic growth for 2002-03, 50 per cent pegged it at between 4.5 and 5 per cent. About 46 per cent felt that the growth would remain between 5 and 6 per cent and a mere 4 per cent felt that the growth would cross 6 per cent in the current year. The impact that the weak monsoons would have on the overall growth of the agricultural sector is expected to be offset by stronger growth in industry and exports. The Business Outlook survey covered all industry sectors, including small, medium and large enterprises from different regions. The survey covered responses from 153 member companies across a spectrum of industry groups both in public and private sectors.
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