2019-08-11_Business_Today

consumption growth in rural India, which

was historically three-five percentage

points higher than urban consumption, is

slowing down at double the rate of urban

demand in recent quarters.

Market experts say that everybody is sit-

ting on the sidelines and waiting for things

to turn around as they are not sure about the

short-term landscape. The uncertainty has

triggered risk aversion on both consumption

and investment, and it is perhaps the begin-

ning of a vicious cycle. “The risk aversion is

spreading out from investors to lenders to

end consumers,” says an economist who does

not want to be named.

Besides, there is a debt overhang on all

balance sheets, be it government, corporate

houses and households, which makes each of

them cautious of the next step. Economists

fear that the uncertainty has not hit the head-

line numbers (like GDP) yet, but given that

the negative sentiment has continued for

over six months, it may soon start doing so.

Respondents are hoping for improve-

ments in just one area – cost of raw mate-

rial. For instance, only 30 per cent expect

it to worsen in the July-September quarter.

In the last survey, the corresponding num-

ber was much higher at 50 per cent.

As a supplement to the BCI survey, we

have assessed other indicators of economic

growth. These include macroeconomic con-

ditions such as export-import data, index of

industrial production (IIP) and consumer

price inflation (CPI). The CPI rate at 3.1 per

cent in June remains well below the RBI’s

target of 4 per cent. Besides, there are some

worrying signs on export and IIP fronts.

Export growth toppled to a 41-month low

in June due to poor performance of petro-

leum, gems and jewellery, and engineering

goods. Imports, too, fell sharply to touch a

34-month low. Meanwhile, the drop in IIP

numbers in May has raised hopes of further

rate cuts by the RBI in its August policy.

The economy may not be in the best

shape right now, but the macro numbers

are still holding up, except for IIP and GDP

growth, which was subdued in the last two

quarters of FY2018/19. More than the pol-

icy intervention, a plethora of sentiment-

boosting and confidence-building measures

need to be implemented to turn around the

mood of corporate India.

@manukaushik

The Grim Outlook

How would you describe your

confidence in economic prospects

over the July-Sept quarter?

Economic

Prospects

A huge 57% see

no change

22

56

15

Financial
Situation
28% expect
things to
worsen

Sales Pickup

58 per cent see

no change

Profit Pickup

38% expect

things to worsen

Do you think that

the UnionBudget has done enough

toboost economic growth?

When do you expect private

consumption to bounce

back?

ONE

QUARTER

TWO

QUARTERS

CAN’T SAY

Substantially worse

Moderately better

Moderately worse

Substantially better

Same/no change

All figures in per cent

August 11I 2019 I BUSINESS TODAYI 45

(^32)
58
(^2017)
Order Book/
Demand
More than half
see no change
1
(^32)
22
56
4
21
57
16
2
17
Ye s
12
No
65
Can't Say
23
19
37
44
52
30
9 8
1 6