Economists feel any recovery in industrial output and economic growth would happen only towards the end of 2009. Though there is no definite evidence, there are some signs Indian economy would bottom out soon.
Robert Prior-Wandesforde, Economist with Hongkong and Shanghai Banking Corporation (HSBC), said “we believe there are a number of reasons to be positive about India’s growth prospects. Individually, none of the factors are hugely powerful, but collectively they should drive a recovery later this year which is likely to gain momentum in 2010.”
Tanvee Gupta & Chetan Ahya, Economists at Morgan Staley, in a note, said they expect industrial production to start recovering gradually from June-July 2008 and achieve a growth of 6-7 per cent by March 2010, while maintaining that industrial output growth would remain close to zero or falling for the next two-three months.
Though the headline numbers are likely to remain weak, growth in several of the other economic indicators indicate improvement in industrial activity. In April 2009, passenger car sales grew 9.8 per cent against 6.8 per cent a year earlier, commercial vehicle sales shrank 12.3 per cent against 30.2 per cent earlier, two-wheeler sales increased 9.2 per cent against 2.5 per cent earlier and cement dispatches were 13 per cent higher against 10.4 per cent earlier.
“We feel there’s no clear evidence that the economy has bottomed out in Q1 or Q2 of 2009. There are some indicators, which are seeing a change in trajectory. This may be because of inventory-readjustment rather than an increase in final demand. We feel that revival may still be a couple of quarters away,” said Deepali Bhargava, Economist with ING Vysya Bank.