Monday, Mar 24, 2003
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By P.K. Bhardwaj
Since the ASCON survey was conducted before the start of the Iraq war, it points out that if the war does not cause global economic turbulence and if the "feel good" factor of the budget continues, and if India has a normal monsoon, then the Indian manufacturing sector can expect the "good news" to continue in the coming year. Covering the 12 months of the current fiscal and 132 manufacturing sectors, 118 sectors taken into account last year, the survey notes that production is up sharply across many sectors. Fifteen sectors have shown "excellent growth", which is defined as more than 20 per cent. Only four sectors had recorded the "excellent growth" during last year. Among the fast growing ones are the two-wheelers, VCR/VCD/DVDs, air-conditioners and pharmaceuticals. In addition, this year, 34 sectors showed a "high growth" of 10 to 20 per cent increase in production in comparison to only 19 sectors that qualify for mention in this category last year. "Moderate growth"— an increase in production of less than 10 per cent — was recorded by 68 sectors as against 67 sectors last year. This year, only 17 sectors have shown negative growth, which is much less than the 28 that showed negative growth last year, confirming that the recovery is broad-based. The Indian manufacturing sector is not only doing well domestically. The latest ASCON survey shows that the Indian exports are also rising strongly. This year's survey covers 57 sectors as compared to last year's 51. It shows that 22 sectors have shown an "excellent growth" of 20 per cent increase in exports, a distinction attained only by seven sectors last fiscal. Cars, cold-rolled steel, cement and precision tubes are among the fast growing exporting sectors. There were 21 sectors in the "high growth" category in exports as only eight sectors fell under this classification in the preceding year. In the "low growth" category of less than 10 per cent increase in exports, this year just seven sectors figure, while the number last year was 19 — which is more than double. Only seven sectors have shown a fall in exports. Last year there were 17 sectors that had shown a similar fall in exports. The ASCON survey trend showing rising industrial production has also been confirmed by the Government of India's data for the `Index of Industrial Production'. In the 10 months between April and January, industrial output was up by 6.4 per cent compared to the previous period. However, some industry sectors continue to face constraints. Too many clearances slow investment in infrastructure, especially in power generation. At the same time, the high cost of power is making the chemical industry uncompetitive. The sharp recession in the tractor industry also affects some auto component sectors. The rising cost of petroleum products is eating into the margins of the paint industry. However, as a CII study pointed out, a 6.5 per cent increase in industrial output is only half of what is needed. The country has to grow at a sustained rate of 8 per cent a year to double its per capita income in 10 years. For this to happen, the industry must grow at 11 per cent a year.
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