Festive signposts

Diwali brings a new year for the trading community, with consumer spending rising sharply around this time of year. Despite ups and downs in...

Diwali brings a new year for the trading community, with consumer spending rising sharply around this time of year. Despite ups and downs in recent weeks, Nifty did cross 2350 and the stock markets seem to be infused with hope in anticipation of rising profits. The half-yearly corporate results indicate a healthy rise in profits and sales indicating that India still remains on the upswing of a business cycle. The latest figures for manufacturing growth for August showed an 8.2 per cent rise. Consumer goods production was buoyant at 10.6 per cent, buoyed by the high growth in consumer durables 8212; at 13 per cent. Investment activity continued to be high. This was reflected in the growth in capital and basic goods at more than 8 per cent. The latest export figures show that for the period from April to September, exports jumped by more than 20 per cent. The removal of quotas has resulted in Indian textile exports having done well, with readymade garments up at 16 per cent.

The other point to note is that despite the upturn in economic growth, the country is not witnessing rampant inflation. The projection for GDP growth is high at 7 to 7.5 per cent, while inflation is expected to remain at 5 to 5.5 per cent. The government8217;s decision to raise the FDI limit in the telecom sector to 74 per cent has already yielded results with Vodafone of Britain buying 10 per cent of Bharti Telecom. FDI restrictions in construction and real estate have already been eased and the debate is now on about FDI in the retail sector.

Over the last 15 years, Indian consumers have enjoyed the benefits of new technology, lower prices and greater availability that comes with FDI and the removal of industrial licensing. All this has, in turn, boosted spending as a large number of products, deemed luxurious in the days of import control, are now available at affordable prices. The economy gets a fillip with sustained consumer spending, as middle India sets out to buy new cars, TV sets, cameras, DVDs and air-conditioners, India can proudly claim to have taken new products and services to the aam aadmi. The service sector is also thriving thanks to telecom, cheaper travel and the IT boom. All said and done, the slowdown in reforms has not defeated corporate India 8212; and that is good news.