24 Feb 2010 4:01 PM

Corporate India back on growth track

The sales figures of Corporate India are projected to rise by 4.7 per cent in fiscal 2009-10. They grew by 13.4 per cent in the December 2009 quarter, after falling for two consecutive quarters. We expect sales growth to accelerate to 18 per cent in 2010-11.

Net sales of the manufacturing sector grew by 18.5 per cent in the December 2009 quarter compared to a year ago. The growth came after three consecutive quarters of a decline in sales. The factors that led to this robust growth were a sustained rise in demand, improvement in prices and a low base.

Sectors like automobiles, auto ancillaries, tyres and textiles benefitted from the pick-up in demand, while sugar, edible oils, polymers, steel and copper gained from the rise in commodity prices.

The Index of Industrial Production (IIP) rose by 16.8 per cent y-o-y in December 2009. This was the highest monthly growth recorded by the index since April 1982. We have, therefore, revised our forecast for industrial production growth in 2009-10 upwards to 8.9 per cent. Our projection for 2010-11 remains unchanged at 9.4 per cent.

We expect rabi foodgrain production to touch an all-time high of 117.7 million tonnes in 2009-10. Though acreage did not change significantly, yield is expected to increase because of favourable climatic conditions.

The economy is expected to grow by 7.1 per cent in 2009-10, and by an impressive 9.2 per cent in 2010-11.

Krishna Warrier
kwarrier@cmie.com