CII ASCON survey finds economic recovery on track

08 Jun '16

5 min read

On the other hand, while the share of sectors recording 'moderate' growth has dropped to 45.1 per cent (46 out of 102 sectors) as compared to 53.0 per cent (53 out of 100 sectors) in Q3FY16. The number of sectors recording 'low' growth has declined significantly with 24.5 per cent (25 out of 102 sectors) in Q4FY16 as against 33 per cent (28 out of 100 sectors) in Q3FY16. The movement of sectors from lower to higher growth rates clearly points towards an improvement in the growth trends.

On capacity utilization, an indicator of demand acceleration in the economy, the Survey reveals improvements in the January–March quarter. According to the Survey, around 53.3 per cent of the respondents have reported capacity utilizations in the range of 50 to 75 per cent for January – March FY16 quarter registering a slight improvement from the last quarter. 30.8 per cent of the respondents have reported it to be in the range of 75-100 per cent when compared to 21.4 per cent recorded in the last quarter. The trend is expected to continue in the coming quarters as well.

With respect to issues and concerns impacting growth, lack of domestic demand (58.8 per cent), high tax burden (50.0 per cent), cost and availability of finance (41.7 per cent), competition from imports (40 per cent) have been cited as the most important constraints by more than 40 per cent of the respondents.

The Survey respondents have emphasized the need for intensive action on reforms related to trade and the business environment and have stressed on improving the 'Ease of Doing Business' indicators with a focus on removing the massive transaction costs by enabling efficient processes and a conducive taxation system to help integrate India into global supply chains. These measures, coupled with sustaining the reforms agenda, particularly ensuring quicker progress on reforms such as the GST Bill and LARR (Amendment) Bill, 2015, will impart greater certainty to investors on the policy front. (SH)

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