India still shining

Business, China, Economics, India, Polyolefins

The figures may not be as impressive as China but India too has been churning out some good growth numbers.

The Index of Industrial Production was up 11.7% in November, the fastest pace of growth in more than two yeas. While growth was broad-based the consumer durables sector was a major contribution as production expanded by 37.3%.

india jpg
Pic Source: Livemint

The auto sector too has recovered with this report estimating a 17% growth in 2009.

The fast moving consumer goods sector expanded by 12% in 2009 and major players expect growth to be higher this year.

Polymer demand was robust in 2009 and the last quarter was especially good.

“We saw a resurgence in demand since November. Q3 [October-December 2009] was superb; it was strong across all polymers,” says one market player.

“PVC growth should be more than 20% in 2009-10 as pipe demand has been going up regularly. The infrastructure and agriculture sectors are the key drivers,” says a source from a local PVC producer.

Will this trend continue? There are as yet no signs of a slackening in fundamental demand although any fall in prices from the current high levels should result in inventory correction.

The economic outlook too is positive with the government increasingly confident of achieving GDP growth of 8% in the year ending 31 March 2010.

But there is also pressure on the government to act fast to tame inflation. Spiralling food prices pushed the wholesale price index up 7.31% in December strengthening the case for the government to tighten liquidity and withdraw stimulus measures introduced during the crisis period.

India is not the only country facing this problem. The Asian Development Bank has warned that while Asia, excluding Japan, will expand by 6.6% this year (up from 4.5% in 2009) led by China and India inflation is a major threat for both countries.

Quick action will certainly be needed to keep the growth story intact.

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