Indicators Pointing a Broadening Recovery in India: Morgan Stanley
BENGALURU: According to Morgan Stanley, certain indicators reveal a broadening economic recovery taking place and bringing about a progressive acceleration in growth in India. Meanwhile this recovery also asserts that the current economic expansion cycle will last longer owing to reduced risks pertaining to macro stability, reports ET.
The following are the positive aspects of the report or indicators that point to a broadening recovery. Good monsoon in India will assist:
Revenue Growth: January-March quarter witnessed broad market revenue growth marking as the first considerable pickup after prolonged weakness for last six months.
Pickup in Discretionary Consumption: Since mid 2012, the discretionary consumption had been on a weak trend. The pickup in consumption thus holds a significant importance. In the past four months, areas like retail loan growth, consumer durables production, air passengers flown, jobs indices and petrol consumption have shown improvement.
Rural Recovery Indicators: After a year of weak trend, two-wheeler sales have steadily shown improvement in the last four months. In addition to this, some research evidence from consumer companies indicates rise in rural demand for the same.
Pickup in industrial/infrastructure and real estate: There has been a steady pickup in steel and cement demand indicating an improvement in infrastructure related activity. Along with this, urban property sales have also gone up towards the quarter ending March 2016. Sales of light, medium and heavy commercial vehicles and electricity production have also bounced back.
Three drivers triggering this growth:
Private Consumption
Public Capital Expenditure
Foreign Direct Investment Flows
What's Not Working
The report indicates that the exports are continuing on weak trend
Private capital expenditure fails to show improvement for low capacity utilization levels. Pricing power isn’t strong enough and corporate debt issues continue to remain.
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