Jay Shankar

Recovery is broad-based

The industrial production numbers were undoubtedly helped by the base effect – which remains favourable till May 2010 – and the stimulus policy. However, there are good reasons to believe that these strong numbers will be sustainable, even as policy makers make attempts at fiscal consolidation and anchoring inflationary expectations.

First, the recovery is pretty much broad-based. Nearly 14 of the 17 industry groups showed positive growth in November over the year-ago period. Second, private consumer spending has revived from a low growth of 1.5 per cent to 5.6 per cent in last two quarters and it should average 7 per cent in the second half. Third, the average run rate for intermediate and capital goods in the last six months has been 13 per cent and 10 per cent. Fourth, manufacturing, which accounts for more than 80 per cent of the index of industrial production, has averaged 10 per cent in the last six months. However, much will hinge on a calibrated stimulus exit.

Yashika Singh
Head-economic analysis,
Dun & Bradstreet India

Private sector role key

Even though a large part of the industrial recovery is fuelled by the fiscal stimulus, there are sufficient indications that investment and consumption are firmly on the revival path. Growth in the capital goods sector averaged 12.2 per cent during Sep-Nov 2009 against 8.5 per cent during Sep-Nov 2008, pointing towards restoration of investment activity. Improving consumer confidence can be seen by the strong growth in consumer durables sector. For this industrial revival to be sustained, further strengthening in private sector demand will be crucial, so as to mitigate the impact of expected reduction in government spending. Besides, the current growth in the production of capital goods will need to continue on a sustained basis over the next few months, to support the overall industrial recovery. The signs do seem positive on this front, as evidenced by the D&B Composite Business Optimism Index for the first quarter of 2010, which witnessed an increase of 43.4 per cent on a yoy basis.

It would be appropriate to look at expressways with cement, concrete as these will be greenfield projects.

Kamal Nath, The government is looking at using cement for constructing over 18,000 km of expressways. The proposal, if implemented, would provide a big boost to the cement companies.

The market gave you two years leeway, but I think now it’s time to deliver.

Alwaleed bin Talal, Saudi investor Prince Alwaleed bin Talal told Citigroup Inc. Chief Executive Officer Vikram Pandit. The New York-based bank’s shares tumbled 89 percent during Pandit’s first two full years in the job.

I find it interesting that people who couldn’t spell China 10 years ago are now experts on China.

Jim Rogers, Co-Founder of the Quantum Fund and Chairman of Rogers Holdings, Jim Rogers, criticised the famed short-seller Jim Chanos and said he is wrong on a lot of things and doesn’t understand China. Jim Chanos expects the Chinese economy to collapse.

There is never an easy time to do it. The longer they wait, the greater the chance they sow the seeds for the next bubble. So I’m in favor of an early exit strategy.

Stephen Roach, The chairman of Morgan Stanley Asia, believes Bernanke should raise rates now if he believes the economy is as strong as he says it is.

The euro area economy is expected to grow only at a moderate pace in 2010 and the recovery process could be uneven.

Jean-Claude Trichet, President of European Central Bank (ECB) says, with Europe still recovering from recession, ECB has kept eurozone interest rates on hold at a record low of 1 per cent for the eighth month in a row.