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Signs of sustained recovery for India - Views on News from Equitymaster
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  • Nov 13, 2009

    Signs of sustained recovery for India

    Data released yesterday showed that industrial output in India grew by 9.1% in the month of September, further evidence of the rising domestic demand in the country. And even though this is lower than the 11% growth seen in August, the fact that industrial output has sustained a relatively high growth momentum from June of this year adds comfort to the view that the recovery has so far proven to be a sustained one.

    80% of this industrial output is comprised of manufacturing, which grew 9.3% during September, thus leading the overall growth for the month. Consumer durables posted the most impressive growth of 22.2%, evincing a higher purchase of goods like TV, ACs and refrigerators. Consumer goods as a whole grew by 8.2% in September, compared with 7.4% in August. It may be noted that auto sales too have seen a robust performance recently, growing 15.6% in October.

    Export figures for the month of October released this week also showed that key sectors are heading for a recovery as the decline slowed to 11.4%, compared to a fall of 13.8% in the month before that.

    All this has led to further hopes that this momentum will continue in the second half of FY10 and optimism that India Inc. will be a direct beneficiary of the same.

    The US adds to the good news…
    Initial jobless claims in the US too gave reason to cheer. Unemployment claims in the country fell to a 10 month low of 502,000 in the week ended November 7 according to data from the US Labor Department. Interestingly, 7.3 m people have lost their jobs in the US since the start of the recession in December 2007, perhaps a sign that most companies have already got down their staff levels to as low as they can. Thus, the scope for acceleration in the level of unemployment looks most likely a remote possibility from here on.

    Things seem to be getting steadily better for the global economy since the dark days of the credit crisis last December, and chances of reversal in the recovery look slim. That said, the only apprehension in investors' minds at this moment is that all these positives may just be a result of the aggressive doses of stimulus being fed to economies by their governments the world over. And as the stimulus packages and loose monetary policies will have to be unwound sooner or later, the sustenance of the recovery in the face of that will continue to keep investors on the edge of their seats. The recent volatility in the stock markets evinces that anxiety.



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