Ahead of release of the GDP data for the second quarter of this fiscal, a report by CII-ASCON painted a gloomier picture of industrial growth in July-September, 2012-13 as larger numbers of sectors recorded dismal numbers in output than predicted by its survey earlier.
Besides, industrial production is not expected to show recovery in the third quarter as well, showed the survey even as a slew of reforms announced by the government were aimed at reviving investment sentiments.
"The actual performance of July-September quarter turned out to be worse than what was predicted earlier. As against only 15.5% of the sectors predicting negative growth performance, the actual figure was much higher at 32%," says the Confederation of Indian Industry (CII) in a statement on the Survey.
Similarly, as against 29% sectors predicting high growth in output, actually only 19% sectors experienced so.
"This implies that the deterioration in operating environment for businesses has stayed ahead of expectations," the statement added.
The Survey categorises the output growth range in four broad categories--excellent ( more than 20%), good (10-20%), low (0-10%), and negative growth.
The sectors reporting negative output growth in the second quarter of current fiscal moved up to 32.1% from 10.6% in the same period last year.
Also, sectors reporting low growth (0 to 10%) slightly moved up from 44.7% to 44.9%.
The GDP data for the second quarter is slated to come on November 30. The economy grew 5.5% in the first quarter of this fiscal compared to 8% in the corresponding period of last fiscal and 5.3% in the fourth quarter of 2011-12. Industry (without construction) has a share of about 18-19% in GDP.
The industrial production has been depressed this fiscal. Of the six months, it contracted for four months, the latest being 0.4% in September. In the first six months of this fiscal, industrial production rose by just 0.1%.
For the third quarter, about 77% respondents of the 101 sectors surveyed said that they are expecting a low or negative growth in output against 65% predicting the same in the corresponding period of last fiscal.
At the same time, last year only 22.7% expected a growth of over 10% in production against 34.3% last year.
Only 23% predicted ‘excellent’ to ‘high’ output growth in October-December quarter of this fiscal, down from 34% in the same quarter last year.
Sectoral analysis in the survey has reinforced the slowdown being seen in the basic, intermediate and capital goods categories in industrial production. In the Index of Industrial Production (IIP), production of capital goods declined in all the six months of this fiscal, the latest being a contraction of 12.2% in the CSO data for September.
The survey, however, cautioned that even the consumer goods sector may witness similar deterioration in coming quarters with the fading away of the favourable impact of ongoing festival season on demand for consumer durables.
Expressing concern over the performance of the industrial sector, CII director generaal Chandrajit Banerjee said that the Survey pointed to a continuation of the slowdown and the mood lifters in the form of recently announced reform measures are yet to take effect.
He also raised the demand of a cut in the key policy rates by the reserve bank to ease the monetary situation.
The RBI has been cautious and has kept the repo rate unchanged in its policy review on October 30, in the wake of uncomfortable situation on the inflation front. The wholesale-price inflation stood at 7.4% in October.
“Industry is in need of a combination of fiscal, monetary and administrative measures,” Banerjee said.
