The clearances awarded to various projects by the CCI and the recent pickup in new project announcements is encouraging-ICRA

Provisional data released by the CEA indicates a small improvement in growth of electricity generation in December 2013 as compared to November 2013, led by thermal electricity generation, which would support industrial growth in the just-concluded month. Additionally, the pickup in the pace of sugarcane crushing from December 2013 onwards would boost growth of consumer non-durables in the near term.

However, the moderation in growth of merchandise exports in USD terms (to 3.5% in Dec 2013 from 5.9% in Nov 2013) and the combined production of passenger vehicles, commercial vehicles and three- and two-wheelers (to 2.1% in Dec 2013 from 7.8% in Nov 2013; Source: Society of Indian Automobile Manufacturers or SIAM) as well as the impact of the continued tight availability of gold on gems & jewellery production would act as a drag on growth in December 2013.

The clearances awarded to various projects by the Cabinet Committee on Investments (CCI) and the recent pickup in new project announcements is encouraging. However, the long gestation period of some of these projects as well as the muted private investment sentiments suggest that a pickup in growth of capital goods is not imminent. Overall, industrial output is likely to display a muted growth in December 2013 as compared to the 0.6% contraction in December 2012.

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