Economy

Industry expects capacity utilisation to touch 50% in H2

Our Bureau New Delhi | Updated on October 04, 2020 Published on October 04, 2020

India Inc estimates capacity utilisation of more than 50 per cent during second half, that is October-March, of the current fiscal. This will happen for first time since advent of the pandemic early this year.

“A steady recovery of the Indian economy is on the anvil as corporate India restarts business and economic activity, with lockdowns being increasingly relaxed in many parts of the country,” industry lobbying group Confederation of Indian Industries (CII) said in a statement. This optimism has come after key highfrequency indicators showed much better performance in September. These include GST collection (₹ 95,480 crore, 4 per cent rise), export (growth of 5.3 per cent), e-way bill generation (record 5.74 crore), PMI-Manufacturing (56.8 in September) and power generation (13 per cent).

CEO study

According to CII, it is important to allow a complete opening of the economy for demand to pick up, which in turn will propel capacity utilisation. “CII has been working closely with States and city corporations to bring down uncertainty over the opening protocol. The uptick in demand is expected to gain momentum in the coming weeks with the festive season round the corner,” it said. The study is based on polls among 115 chief executive officers.

The unlocking of almost all economic activities along with the reform and revival measures announced by the government and the RBI have contributed to the gradual improvement in business sentiments in the second half of the current financial year. “While in most cases, the performance — revenue or capacity utilisation — is estimated to be lower than the comparative figures in 2019-20, a large percentage of the CEOs polled have shown confidence in the days ahead, indicating that the worst may be behind,” the study said.

On consumer demand, while 32 per cent of the CEOs are hoping for better prospects, 27 per cent expect no change when compared to the second of last year. However, only 31 per cent of the CEOs expect their revenue growth to be in the positive territory during the period as against the previous year, as far as revenue growth is concerned. On exports, 40 per cent of the CEOs expect better prospects and 24 per cent of then expect no change in prospects in H2 compared to the same period last year.

According to CII, the governments both at the Centre and States would need to focus on livelihoods in addition to lives, and hence efforts need to be made to stall the practice of sudden and ad-hoc lockdowns announced in States as well as districts. These not only further disrupt the revival of economic activities but also do not yield the desired results on lives.

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Published on October 04, 2020
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