The IIP figure is worse than most people were expecting. I was expecting IIP figure to be, the growth to be below 4%, but the fact that I expected it does not make it good news, it is bad news. The overall growth for the year, no I expect actually it will be less than what we had projected in the beginning which was 9% a long time ago, but no way near 7%.
My own expectations sort of back of the envelope calculation is we are headed to 8%-8.1% kind of growth during the year and let me tell you saying this today sounds over optimistic, given that the IIP growth has done so poorly and manufacturing growth has done so poorly. But you have to keep in mind first of all that both these indicators index of industrial production and within that manufacturing which is about 75% of the industrial sector are extremely volatile.
So, yes there is no getting away that this performance is bad, we have to be concerned about this, but keeping the volatility in mind this can began to change within two months, three months. My expectation is that exports, which have done very well actually, will slow down a little bit from September, but still it is going to be in good shape through the year.
Foreign direct investment will be good. So the slowdown in manufacturing and industry that we are seeing hopefully will be countered by these better trends by the end of the year. And we should end up with overall a growth rate of 8% or 8.1 % for this year.
ET Now: The capital good index has plummeted by over 17%, how bigger concern is that? Does that also mean that investments are not happening at desirable pace and what is contributing to such a sharp volatility in the capital good index?
Kaushik Basu: The capital goods fell by over 15% and the growth rate is minus 15 point some percent for the month of July, that is very very unfortunate. But we are used in the capital good sector for months when it rises by 30% and then another month when it will drop by 10%. So, there is a lot of volatility that does not mean you discount something like this where it shrinks by 15%.
But I feel the volatility is not so much the volatility of actual performance as of measurement. Yes the capital good sector is not doing too well, which is not very surprising because the interest rates probably beginning to bite. But keeping the volatility in mind let us hope that another two months and we will again see buoyancy in that variable.
Rakesh prasad
PGDM -3rd sem
My own expectations sort of back of the envelope calculation is we are headed to 8%-8.1% kind of growth during the year and let me tell you saying this today sounds over optimistic, given that the IIP growth has done so poorly and manufacturing growth has done so poorly. But you have to keep in mind first of all that both these indicators index of industrial production and within that manufacturing which is about 75% of the industrial sector are extremely volatile.
So, yes there is no getting away that this performance is bad, we have to be concerned about this, but keeping the volatility in mind this can began to change within two months, three months. My expectation is that exports, which have done very well actually, will slow down a little bit from September, but still it is going to be in good shape through the year.
Foreign direct investment will be good. So the slowdown in manufacturing and industry that we are seeing hopefully will be countered by these better trends by the end of the year. And we should end up with overall a growth rate of 8% or 8.1 % for this year.
ET Now: The capital good index has plummeted by over 17%, how bigger concern is that? Does that also mean that investments are not happening at desirable pace and what is contributing to such a sharp volatility in the capital good index?
Kaushik Basu: The capital goods fell by over 15% and the growth rate is minus 15 point some percent for the month of July, that is very very unfortunate. But we are used in the capital good sector for months when it rises by 30% and then another month when it will drop by 10%. So, there is a lot of volatility that does not mean you discount something like this where it shrinks by 15%.
But I feel the volatility is not so much the volatility of actual performance as of measurement. Yes the capital good sector is not doing too well, which is not very surprising because the interest rates probably beginning to bite. But keeping the volatility in mind let us hope that another two months and we will again see buoyancy in that variable.
Rakesh prasad
PGDM -3rd sem
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