Green shoots seem to be appearing in the manufacturing and industry sectors following the impetus provided by the new government at the Centre. Recent data from the department of industrial policy and promotion (DIPP) points out that both the sectors have started looking up with industry GDP, manufacturing GDP, and capital goods formation showing an uptick in the months post the formation of the National Democratic Alliance (NDA) government, compared with the same period last year.
The country's Gross Domestic Product (GDP) has already improved to 5.7% in the first quarter of the current financial year, compared with 4.7% in the same period last year. In the last two years of the UPA II, the economy registered 4.5% and 4.7% growth, respectively, which is the country's worst growth performance in the last 25 years.
However, things seem to be changing now as both industry and manufacturing growth have bounced back into the positive growth trajectory from negative zone. In the first quarter, according to the DIPP, industry GDP growth rate spiked at 4.2% compared with -0.4% in the same period during the previous financial year.
Similarly, manufacturing GDP growth rate has also gone up from -1.2% in the first quarter of the last financial year to 3.5% in the April-June period of the current financial year. In June this year itself, manufacturing logged 1.8% growth compared with -1.7% in June last year. Performance of capital goods, an indicator of revival of positive investment sentiment, has shown considerable improvement from -6.6% in June 2013 to 23% in June this year.
Additionally, exports of select major commodities have also gone up, though marginally.
Explaining the reasons behind the uptick, a top DIPP official told dna, "The key aspect is a positive sentiment among the business community. They have regained the confidence in the new government. Plus, some of the processes related to application, certification and inspection have already been altered by the government. With the launch of 'Make in India' campaign, more investments are likely to come in. Apart from that, the ministry has given approval to 33 pending applications in the defence sector, which will give a fillip to the industry and manufacturing sectors."
The companies that have received the nod are Reliance Aerospace Technologies Limited, Bharat Forge Limited, Mahindra Telephonic Integrated Systems Limited, Punj Lloyd Industries Limited, Mahindra Aero Structure Pvt Limited, Tata Advanced Materials Limited.
Revival of sentiment is apparent from the CII's business confidence index, which is seen soaring. "Indicating a sharp improvement for the second consecutive quarter, the CII-Business Confidence Index (CII-BCI) for July-Sept quarter has shot up to 57.4, up from 53.7 in April-June quarter and 49.9 in Jan-March quarter this year. During the same quarter last fiscal, the index had touched the all-time low value of 45.7. The number 50 is the dividing line on the index between positive and weak business confidence," said CII.
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