Nov 27, 2000|
Manufacturing misfires on growth
One hopes that the Government has taken cognisance of the alarm bells beginning to ring with the economic numbers coming in. Some of the indicators do not make a pretty picture.
The manufacturing sector has been slowing down for the past three consecutive quarters, while inflation has been rising in the same period. Further, the capital goods sector recorded negative growth in the second quarter of the current fiscal, down 1.6%. This does not bode well for the economy as this sector is the harbinger of future economic activity. Consequently, a slowdown may imply other sectors will follow suit in the months to come.
The incumbent govt has exhibited awareness of the gravity of the situation. It announced the speeding up of the second generation reforms and disinvestment of public sector units (PSUs). However, there have not been any concrete steps on this front after the initial announcement. The markets will look towards the winter session for new policy announcements.
Remedial measures in the form of divestments or second generation reforms should be concretised before the malaise spreads any further. The markets will be looking towards positive steps being taken by the Government. Failure to do so will keep the markets subdued. On the short term, the US presidential election results are almost through with indications that Mr. Bush is the new president of America. The Asian markets have opened strong on this news and one can expect a ripple effect on the Indian bourses.
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