Jp Morgan Sec Sees Signs Of Economic Recovery

Preliminary signs of an economic recovery have been observed in India, said JP Morgan Securities India Private Ltd. The securities research firm said: "We see initial signs of recovery ahead: food credit infrastructure index, commercial vehicle sales, cement dispatches and diesel sales are all up; we expect better result in the second half of fiscal 2001-02."

JP Morgan feels the poor industrial performance in September and the rating preview by the international rating agency Fitch were perhaps among the last f negative releases in the near term. It said: "Fitch downgrades India's credit rating but this will have only a limited economic impact."

 

The securities firm mentioned that the incremental food credit to overall loan ratio in the current fiscal so far was at 35 per cent. The same over the comparable period during the last two financial years was 22 per cent and 24 per cent, respectively, when the agricultural growth was less than one per cent.

"This (the higher incremental food credit to overall loan ratio) could indicate a revival in the agriculture sector, which contributes a quarter of gross domestic product and occupies three-fifth of the work force," it said.

JP Morgan said domestic consumption of petroleum products, cement shipments and sale of commercial vehicles are 'initial harbingers of growth'. These factors have shown the sign of improvement though they are in their nascent stage, it feels. It also pointed at the infrastructure index which posted year-on-year growth of 5.5 per cent and 2.2 per cent in September and October. The growth was higher than average growth of 0.9 per cent YoY in the first five months of the fiscal.