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Downturn in industrial growth continues to dampen industry sentiments: CII ASCON Survey
The CII ASCON survey conducted for the period of Oct-Dec 2013 is reflective of a low growth indicating an ongoing slowdown in the industrial performance.The industrial activity in the October-December 2013 quarter remained subdued and grim, treading along the July-September 2013 growth path.

The CII ASCON Survey categorises the growth range in four broad categories, namely excellent (>20%), good (10-20%), low (0-10%), and negative (<0%) and for this quarter covered 110 sectors.

According to the CII ASCON Survey, there is a significant rise in the sectors displaying negative growth this year; 31 sectors out of total 110 sectors (28.18%) were negative compared to 21 sectors out of total 101 sectors (20.8%) in 2012. The Survey also shows a contraction in the number of sectors recording low growth at 52.72% (58 sectors out of 110 sectors) as compared to 56.4% (57 sectors out of 101 sectors) in the same quarter previous year. 

The percentage of sectors reporting excellent and high growth in current quarter is at 19% (21 sectors out of 110 sectors) as compared to 16.8 % (17 sectors out of 101 sectors) in the same quarter previous year. But at the same time, high growth sectors have shrunk to 10.90% (12 sectors out of 110 sectors) in Oct-Dec 2013 from 18.8% (19 sectors out of 101 sectors) in Oct – Dec 2012. This continuous trend of slow and deteriorating industrial growth outlines the weakened economic health of the country.

Figure 1: % Distribution of sectors in terms of rates of industrial growth: Oct-Dec, 2013 over 2012

"It is of utmost concern that the majority of segments in basic, intermediate, and capital goods sectors continue to fall in ‘low’ growth bracket during October-December 2013, as revealed by disaggregated analysis of the CII ASCON Survey. The consumer durable segment has also reported similar growth patterns with most of the segments recording low and negative growth reflecting a disturbing trend.” said Chandrajit Banerjee, Director General, CII.

In this quarter, high- tech electronics such as LED/LCDS, computer tablets are amongst the segments that have recorded excellent growth. Alongwith, the scooter and scooterettes segment has recorded excellent growth. This growth can be largely attributed to the growing demand and preference of these products especially in the Tier 3 and Tier 4 cities and young population. Tractors has also recorded ‘excellent growth’ for Oct-Dec 2013 reflecting an improved performance of the farm sector.

But at the same time, the continuing low/negative growth experienced in the capital goods reinforces the view that new investments are impacted. Sectors such as earth moving & construction equipment, machine tools, telecom equipment, industrial gases, distribution transformers, textile machinery, motors, relay control panels, power transformers, pumps, have registered low or negative growth. The core sectors viz steel, cement, petroleum, crude oil have also recorded low growth.

Figure 2: % distribution of growth range across used-based classification of sectors: Oct-Dec; 2013 over 2012

In the consumer durables segment, items like two wheelers, utility vehicles, M&HCVs, microwave ovens, DVD players, audio home theater, TV, Tyres are among the prominent sectors  reporting 'low' to 'negative' performance for the Oct-Dec 2013 quarter. Amongst the consumer durable segments such as washing machines, small appliances, air conditioners which had performed well in the previous quarter of July-September 2013, have now shifted to the low growth category.

"To improve the prevailing downturn in the economy, strong emphasis needs to be given on reviving investments in manufacturing, expediting clearance of delayed projects, easing investment climate for manufacturing. Though there is some movement in infrastructure projects, the industry looks forward to a strong action on all these aspect to provide impetus to growth in the economy," said Banerjee.

The Survey respondents have raised concerns over the weakening of the economy and stagnation in manufacturing growth. The global economic uncertainness continues to prevail and impact the growth of investments and exports in the country. Rising inflation, stalled investments, subdued consumption, inverted duties and anomalies further add to the economic downturn. 

Respondents have stressed on the need for reviving the investments, rationalizing taxation structure and increase infrastructure spending to kick start the investment and growth in the economy.

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