Is the Indian economy is poised to move upwards?
The year 2021, with almost a month passing by, has indeed started on good note. The outlook on growth has improved significantly, with the declining cases of Covid-19 positive coupled with growth impulses becoming more broad-based, and the rollout of the vaccination programme in the country auguring well for the end of the pandemic. Survival and revival was the base mantra for all industries.
The global economic recovery slackened in Q4 2020 as several countries battle second waves of COVID-19 infections, including more virulent strains. With massive vaccination drives underway, risks to the recovery may abate and economic activity is expected to gain momentum in the second half of 2021. Global trade is also expected to rebound in 2021, with services trade on a slower recovery than merchandise trade, according to a recent RBI statement.
As against this, India’s economy is showing decisive signs of a ‘V-shaped’ recovery with the return of consumer confidence, robust financial markets, an uptick in manufacturing, and exporters braving it out in the global market with never-say-die spirit says an Assocham report.
Consumer confidence is reviving, and business expectations of manufacturing, services and infrastructure remain upbeat. The movement of goods and people and domestic trading activity are growing at a robust pace. Electricity and energy demand reflect a broader normalisation of economic activity, even as fears of a second wave abate. Data for sales and new launches of residential units in major metropolitan centres reflect a renewed confidence in the real estate sector. Manufacturing, services and composite purchasing managers’ indices (PMI) are in expansion zones – the manufacturing PMI rose to 57.7 in January 2021 from 56.4 in December 2020 and the services PMI rose to 52.8 in January 2021 from 52.3 in December 2020. Furthermore, the vaccination drive is expected to provide an impetus for the restoration of contact intensive sectors.
The Union budget unveiled recently by finance minister Nirmala Sitharaman is decisive and sharp in its effort to go all out with big money to put a big crisis behind us thus providing significant stimulus to our covid-hit economy. Capital expenditure is slated to rise handsomely, with healthcare, infrastructure, rural development, and education expected to benefit from the Centre’s increased outlays. Big spending here can multiply incomes and revive demand that was repressed by the pandemic’s direct fallout and the uncertainty it threw us into.
Government spends on infrastructure projects like roads, public transport and ports will have a multiplier effect, taking consumer goods to rural markets. As India’s consuming class grows, better infrastructure will help drive both online and offline consumption. Commercial vehicle makers will benefit as demand for trucks, tractors and buses will get a boost.
The Paint industry have always had a direct impact or correlation with the GDP growth. The current scenario of progress from all these above data argues well for the Paint and coatings industry with the resultant indirect increase in demand for paint consumption. Season for paint industry is expected to reach the peak in the coming months.
Let me end this piece with a positive note by repeating the quoting by RBI governor Shaktikanta Das “I would like to say that, going forward, the Indian economy is poised to move in only one direction and that is upwards,”