RTTNews - The growth outlook for the Indian economy has improved from what was envisaged earlier, although a complete industrial recovery is still some time away, a survey carried out by industry body Confederation of Indian Industry, or CII, said.
The report outlined that the country's economic growth is likely to be between 6.5 and 7% during FY10 from 6.7 percent in the previous fiscal year.
Corporate results available from a sample of 515 companies for the first quarter of the current fiscal revealed some incipient signs of stabilization, the report said. As a result of decline in cost of raw materials such as power and fuel and moderation in growth of interest expenses, net profit grew strongly by 26% in the June quarter after having contracted by 7.2 percent in the previous quarter.
Additionally, when compared with results for the FY09 period, the CII-Ascon survey for the period April-June 2009 showed that the number of sectors in both excellent and high growth category has recorded an increase reflecting that industry is building on the marginal signs of recovery.
However, while 18 sectors moved upward to higher growth levels on a year-over-year basis, 23 sectors moved downwards to lower growth. Out of these as many as 18 sectors moved down to negative territory.
According to the survey results, sectors such as industrial gases, two-wheelers reported excellent growth during April-June 2009-10 period. Sectors reporting high growth included cement, fertilizers, capacitors, consumer durables, alcoholic beverages and edible oil.
Dr Surinder Kapur, Chairman CII Manufacturing Council said that the concern is the increase in the percentage of sectors in the negative category to 39% this quarter compared to 21% in Q1 FY09.
The number of sectors reporting negative growth has seen an increase even when compared with results for the full year FY09.
This means that industry would need various measures announced by government in the stimulus package and Union Budget to continue at least till 31st March 2010, said Dr Kapur.
There are some major challenges that lie ahead for the economy, said Chandrajit Banerjee, director general of CII. One of those is the revival of Indian exports, which have declined on an average by 23 per cent since October '08.
Exports grew at just 2.4 per cent during 2008-09, down from 28.9 percent during 2007-08. The trend continues in April-June 2009 as exports declined by over 31 percent, year-over-year.
Fiscal consolidation and the need to sustain the recovery that is still at a nascent stage are other challenges facing the economy, the report pointed out.
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