Rise in the air, this fall?
There is a spring in the step of India Inc, but inflation remains a big worry, reports Sanjib Baruah.business Updated: Nov 20, 2009 20:34 IST
Sitting in his glass-paneled cubicle at Rohan Motors, Greater Noida, Sanjiv Chaurasia, assistant sales manager, is a busy man. And a happy one. His sales team is busy attending to prospective customers, and the daily sales graph is headed north-north-east.
"Things were pretty bad last year. We used to sell only two or three cars and handle 60 enquiries daily. Now we sell six or seven cars and attend to about 150 enquiries. Things are definitely looking up," Chaurasia said, as he prepares to attend to a young couple expressing animated interest in a Maruti SX4.
Government data released last week said the auto sector grew 15.6 per cent in October. The 'feel good' sentiment has spread to other sectors as well. Consumer durables' production grew 22.2 per cent in September, indicating growing consumer appetite.
"The worst is definitely over," said DK Joshi, principal economist, CRISIL. "Things are much better than one year back. All leading indicators are positive. We will move on a growth path again but it will be a slow upward movement as of now."
The industrial output grew 9.1 per cent in September. Average growth rate for the first six months of the current fiscal year is now 6.5 per cent. High industrial growth means more jobs, greater pay hikes.
The country's gross domestic product (GDP) for the April-June quarter grew 6.1 per cent, up from 5.8 per cent in the previous quarter. The government expects the GDP to grow by about 6.5 per cent in 2009-10.
"While industry looks better, agriculture continues to hurt," said Joshi, not quite optimistic of scaling 9 per cent growth too soon.
Last week, Finance Minister Pranab Mukherjee had expressed hopes of more than 7 per cent growth in the coming fiscal and 9 per cent by 2012.
"The recovery is a good augury and stimulus measures have played an important role. It is therefore essential that we retain stimulus till we see ‘real’ growth," said Harsh Pati Singhania, president, Federation of Indian Chambers of Commerce and Industry.
With so many people laid off last year because of the global recession, the obvious auestion crops up: is the job market looking up too?
Some sectors are, indeed, moving forward. A government ministry survey showed that from April to June, the auto sector hired 18,000 more employees.
Information technology (IT) and business process outsourcing (BPO) sectors are also smiling. "We are hiring 50-60 people every week. With everyone on a hiring spree, we are facing the problem of finding people," said Sachin Srivastava, manager, HCL Technologies, BPO Services.
Agriculture, contributing about 18 per cent to the country's GDP and accounting for more than half of employment, is reeling amid drought fears.
"The issue is not about growth rate per se. It is about the livelihood question of two-thirds of India, about their well-being," said MS Swaminathan, the guiding spirit behind India's Green Revolution. "Unless the concerns of this sector are met, social unrest will be on the rise."
The Capital got a taste of this unrest two days ago, when sugarcane farmers, protesting against the procurement policy, forced the government to beat a hasty retreat.
“Agriculture is the foundation of our economy, not the industry or the services sector,” said P. Chengal Reddy, the influential secretary-general of the Consortium of Indian Farmers' Associations. “Without proper agricultural growth there can be no 'true' growth. All this talk of fast growth is just sugar-coating of a bitter pill.”
Agreed Singhania, “Agricultural growth is crucial. Rural demand is an important component of domestic demand, which in turn is an important growth-driver. The issue now is to balance growth vis-à-vis the need to contain inflation.”
The man on the street is concerned with spiralling prices.
“With potatoes at more than Rs 20 a kg, I do not see any ‘feel good’ around me,” said Meena Nair, a housewife in west Delhi. “Earlier, I used to go to the market with Rs 200. Now I take Rs 450 for the same basket of vegetables and groceries."
Food inflation levels have crossed the 14 per cent barrier. Prices of other primary articles went up by 9.16 per cent, while pulses rose 22.73 per cent.
Exports are in a nosedive, and for many, the wait for a job is proving eternal. But all this may well change this fall. Hopefully.