Industry experts 'cautiously optimistic' about economy amid challenges

New Delhi, Feb 28 () Industry experts are cautiously optimistic about the economy going forward as global supply chain disruptions and weakening demand amidst spread of the coronavirus epidemic pose a challenge.

Meanwhile, the December quarter GDP expansion slowed to a near seven-year low and eight core industries recorded a 2.2 per cent growth in January.

"If we see the performance of eight core industries for January, the first month of the fourth quarter and compare it with the third quarter GDP numbers, the situation seems to be improving.

"Take for instance coal production, while it decelerated by 4.3 per cent in third quarter, the trend reversed and coal output grew by 8 per cent in January. Similar trend is visible in cement, giving us hope that the growth slowdown is bottoming out," said Assocham Secretary General Deepak Sood.

India's GDP growth slipped to a nearly 7-year low of 4.7 per cent in October-December 2019, weighed by a contraction in manufacturing sector output, according to the National Statistical Organisation.

The Gross Domestic Product (GDP) growth was recorded at 5.6 per cent in the corresponding quarter of 2018-19.

In the previous quarter (July-September) of the ongoing fiscal, the economic growth was revised upwards to 5.1 per cent from 4.5 per cent estimated earlier.

"The only bright spot in 3QFY20 GDP growth numbers is minor improvement in private final consumption expenditure (PFCE)...However, investment demand does not show any chance of revival," said Devendra Kumar Pant, Chief Economist and Senior Director, India Ratings & Research

Commenting on the NSO data, Upasna Bhardwaj, Senior Economist, Kotak Mahindra Bank said the softening in economic activity continues despite slight improvement been witnessed in the high frequency data for the third quarter.

"...we remain cautious in the data ahead as the global supply chain disruptions and weakening demand amidst spread of the epidemic could pose downside risk to India's growth," she said.

D K Aggarwal, President, PHD Chamber of Commerce and Industry, was of the opinion that the growth is expected to improve further in the coming quarters.

"Plethora of reform measures and focus on consumption demand in the Union Budget 2020-21 will rejuvenate the growth trajectory particularly boost the rural demand and help manufacturing sector to post higher growth," said Aggarwal.

Joseph Thomas, Head of Research, Emkay Wealth Management was of the opnion that the accent on demand-side measures for a consumption-led recovery needs to be emphasized as such measures would reach fruition faster than investment-led measures in a massive consumer economy like ours.

By any reasonable estimate it may be another four to six quarters before there is a convincing turnaround in the fortunes of the economy in a consistent fashion," he said. NKDMKJ