Production growth across majority of manufacturing sectors has jumped in the first quarter of the current financial year with more sectors witnessing higher growth, a survey by the Confederation of Indian Industry (CII) has shown.
The CII ASCON Industry Survey tracks the sectoral growth trends through the responses collected from various sectoral industry associations. It classifies sectors across four broad categories based on their growth trends, namely “excellent” (more 20 per cent growth), “high” (10-20 per cent growth), “moderate” (up to 10 per cent growth) and ‘low’ (no growth).
In the latest survey, of the 70 sectors under scrutiny, the number of sectors witnessing “excellent” growth in Q1FY19, has jumped to 10 from only four sectors in Q1 FY18. At the same time, the number of sectors recording “high” and “moderate” growth has improved marginally while those witnessing “low” growth has come down substantially.
In the first quarter, the number of sectors registering “high” growth has risen to 15 from 14 last year, whereas 31 sectors are witnessing “moderate” growth, one more than last year.
“While the growth trends remain concentrated in the “moderate” category, a deceleration in the pace of de-growth suggests firming of the recovery in the economy,” the survey pointed out. The number of sectors witnessing “low” growth has come down substantially to 14 from a much higher 22, in the same period of the previous year.
“The CII ASCON Q1 FY19 survey results reflect steady progress in economic growth. What is especially significant is that there has been a perceptible increase in the share of sectors recording higher growth. Further, fewer sectors are anticipating negative growth trends. Further, an increase in capacity utilisation is clearly apparent,” Chandrajit Banerjee, director general, CII, said.
On the production front, some of the sectors to register major growth include sugar (223 per cent), commercial vehicles (67.7 per cent), three-wheelers (61 per cent), construction equipment machinery (30.9 per cent) and fertilisers (24.5 per cent), among others.
Automobile sectors continued to dominate the export scenario as well. Exports of three wheelers rose by 75 per cent, while those of commercial vehicles increased by 41 per cent and tractors and two-wheelers saw a rise in outbound volume near 30 per cent. Sugar and rapeseed meal led the pack in exports from the agricultural goods category.
According to the survey, 59.1 per cent of respondents have reported capacity utilisation in the range of 65-80 per cent, while 13.6 per cent reported it to be above 80 per cent.
Exuding optimism on the near-term growth outlook, 63.6 percent of the survey respondents expect the business situation in their respective sector to improve moderately while 31 per cent expect no change in the next six months.
“Overall, going forward the results point towards moderate improvements in growth trends supported by recovery in domestic demand and investment cycle in the coming quarters supported by consumption both in rural and urban fronts, aided by favorable monsoons and moderation in inflation and the onset of festive season,” the survey said.
With respect to issues impacting growth, competition from imports, regulatory burden and lack of required infrastructure were the top three important issues for the industry. Respondents have also flagged the need for a stable business environment; developing alternate long-term funding options for infrastructure such as corporate bond market and municipal bond market, strengthening enforcement of intellectual property rights and building international market access as major policy requirements in the medium to long term.