Steel, auto growth falls; CTV, PCs on a high — CII

The ASCON industry monitor released today said CTVs, computer hardware and software, motor cycles and housing finance were among those sectors which recorded over 20 per cent growth during 1998-99.

As many as 30 industry segments from basic and capital goods, consumer durables and non-durables and intermediate sectors posted negative growth reflecting the recession in the Indian industry.

Among industrieswhich recorded negative growth during 1998-99 were processed food and vegetable, vanaspati, auto components, refractories, machine tools, sugar machinery, industrial furnace, transformers and textile machinery. About 55 industry and services sectors posted a moderate, less than 10 per cent growth during the year, while only about 35 industry segments recorded high or excellent growth ranging from 10 per cent to 60 per cent.

The survey listed in economic slowdown, fluctuating value of rupee, south-east Asian crisis, high raw material costs, liquidity crunch and project delays due to uncertain economic environment, among the principal reasons for poor performance of most of the industrial sectors during the year.

It also revealed the dismal export performance by most of the industries mainly due to inadequate infrastructure, high freight charges, lack of focus in the Exim policy and aberrations in duty structure.

Citing the case of cigarette and tobacco sector, which has posted a negative 28 per centgrowth in exports in 1998-99 from 43 per cent in the previous year, the ASCON industry monitor said the poor performance was due to continued absence of a domestic base for exports and exclusion of India from American tariff rate quota system. The economic slowdown, emanating mainly from a demand recession, took a heavy toll on sales with only three sectors – ACs, motor cycles and newsprint – posting over 20 per cent growth during the year, the survey said.

In contrast, about 23 segments recorded negative sales growth during the year. Textile machinery was the worst sufferer of the demand recession with its sales going down to a negative 38 per cent from a positive 12.6 per cent in the previous year. Most of the basic, capital and intermediate goods posted either a negative or moderate sales growth of less than 10 per cent during 1998-99, the survey said.

The survey projected an improved outlook for many sectors, mainly those relating to construction industry like asbestos cement products, paints, castiron spun pipe, welding and construction equipment in 1999-2000. The survey, based on information provided by member companies of CII and its 77 affiliated associations, accounts for more than 65 per cent of total industry output.

Other sectors projected to do well in the current fiscal include, cigarette and tobacco, drugs and pharmaceuticals, commercial vehicles, CTVs and computers, refrigerators, ACs and washing machines. However, the ASCON projections indicate continuation of recessionary phase to a great extent with more than half the industrial segments, for which production forecast has been made, put in low or negative growth group.

These include, housing finance, air cargo, vanaspati, tea, sugar, pepper, malted food, consumer electronics, auto tyres, glass and rubber goods. Among basic, intermediate and capital goods sectors like aluminium, cement, steel, auto components industrial gases, sugar machinery machine tools and boilers are projected to post low or negative growth during the currentfiscal.