Faster growth to quicken India Inc’s recovery pace

The current uptick in the economic growth momentum is likely to quicken the pace of recovery in the coming quarters. While a majority of the sectors are still continuing to witness ‘ moderate’ growth, a CII- ASCON survey said the ‘ excellent’ and ‘ high’ growth trend is limited only to some sectors. It has also pointed out to a sharp decline in the share of sectors registering ‘ low’ growth.

Of the 102 sectors surveyed, the share of sectors registering ‘ excellent growth’ of over 20 per cent in Q4FY16 has remained constant at 9.8 per cent ( 10 out of 102) as witnessed in the same quarter a year ago period. On the other hand, the share of sectors witnessing ‘ high’ growth of 10 to 20 per cent has increased substantially registering a share of 20.6 per cent ( 21 out of 102) as against 10.8 per cent ( 11 out of 102) recorded in the same quarter in the previous year.

Interestingly, the number of sectors recording ‘ low’ growth has declined significantly to 24.5 per cent ( 25 out of 102) in Q4 FY16 from 30.4 per cent ( 31 out of 102) in the same quarter previous year.

On the capacity utilisation, an indicator of demand acceleration in the economy the survey revealed improvements in capacity utilisation in the economy in the January-March quarter.

According to the survey, around 53.3 per cent of the respondents have reported capacity utilisations in the range of 50 to 75 per cent for January- March FY16 quarter registering slight improvement from the last quarter.

About 30.8 per cent of the respondents have reported it to be in the range of 75- 100 per cent, which is significantly higher when compared to 21.4 per cent recorded in the last quarter. The trend is expected to continue in the coming quarters as well, the survey said.

With respect to issues and concerns impacting growth, lack of domestic demand ( 58.8 per cent), high tax burden ( 50.0 per cent), cost and availability of finance ( 41.7 per cent) and competition from imports ( 40 per cent) have been cited as the most important constraints by more than 40 per cent of the respondents.

Other concerns

ISSUES IMPACTING growth, according to CII Ascon survey, include lack of domestic demand ( 58.8 per cent), high tax burden ( 50.0 per cent), cost and availability of finance ( 41.7 per cent) and competition from imports ( 40 per cent).