Slack in private sector investment: 74% India's manufacturers say they have no plans for capacity addition

By Jag Jivan
The Federation of Indian Chambers of Commerce and Industry (FICCI), in its latest quarterly survey on expectations of manufacturers for the period April-June 2017, has said that “future investment outlook remains less optimistic”, with “74% respondents reporting that they don’t have any plans for capacity additions for the next six months.” Observers consider this as lingering impact of demonetization, effected by Prime Minister Narendra Modi in November 2016.
Pointing out that this just about a one per percent improvement over the earlier quarter, January-March 2017, FICCI, in its “Manufacturing Survey Report – July 2017” says “Although, the bleak investment outlook seems to be waning”, if one takes into account that in October-December 2017, which was the demonetization phase, “77% respondents had no plans for capacity addition”, things are clearly not on the upswing.
“High percentage implies slack in the private sector investments in manufacturing is there to continue for some more months”, says India’s premier industry body, adding, “Large volumes of imports, under-utilised capacities and lower domestic demand from industrial sectors are some of the major constraints which are affecting the expansion plans.”
“On a broader perspective”, the report says, “In some sectors (like chemicals, capital goods, textiles machinery, cement, metals and paper) average capacity utilization has either remained same or declined.” The only sectors which are experiencing a rise in the average capacity utilisation are “auto, textiles and electronics and electrical”, it adds.

The survey further says that the cost of production as a percentage of sales for product for manufacturers in the survey has risen significantly as 69% respondents during the period April-June 2017, against 60% respondents reported cost escalation in the previous quarter. “This is primarily due to rise in minimum wages and raw material cost”, it claims.

69% manufacturers reported a higher cost of production, as against 60% earlier, primarily due to rise in minimum wages and raw material cost

“About two-thirds of the respondents expect slightly higher production levels in the April-June 2017 (when asked for an annual comparison). This also gets reflected in the order books as similar proportion of industry participants reported higher orders for the same quarter (on a sequential basis)”, the survey says.
According to the survey, while about 67% of the respondents reportedly plan to add capacity in the next six months to the tune of about 15%, it underlines, “The expansion plans may get affected by a few delays largely due to the lag period involved in getting plant and machinery, which usually extends to about 20 weeks.”
The survey says, “Almost all of the respondents expect exports to get impacted (fall of 0-5%) due to the recent currency appreciation, while imports to get cheaper by 5-10%.”
“Close to 50% of the industry representatives expect the growth of manufacturing sector to remain same, while a few expect the growth to revive in near future”, the survey says, adding, “For a little over 50% of the respondents, cost of production as a percentage of their sales increased vis-à-vis last year”, mainly due to “inflationary pressures on raw material costs and increase in labour wages.”

Comments

Plastic burning in homes threatens food, water and air across Global South: Study

By Jag Jivan In a groundbreaking study spanning 26 countries across the Global South , researchers have uncovered the widespread and concerning practice of households burning plastic waste as a fuel for cooking, heating, and other domestic needs. The research, published in Nature Communications , reveals that this hazardous method of managing both waste and energy poverty is driven by systemic failures in municipal services and the unaffordability of clean alternatives, posing severe risks to human health and the environment.

Economic superpower’s social failure? Inequality, malnutrition and crisis of India's democracy

By Vikas Meshram India may be celebrated as one of the world’s fastest-growing economies, but a closer look at who benefits from that growth tells a starkly different story. The recently released World Inequality Report 2026 lays bare a country sharply divided by wealth, privilege and power. According to the report, nearly 65 percent of India’s total wealth is owned by the richest 10 percent of its population, while the bottom half of the country controls barely 6.4 percent. The top one percent—around 14 million people—holds more than 40 percent, the highest concentration since 1961. Meanwhile, the female labour force participation rate is a dismal 15.7 percent.

The greatest threat to our food system: The aggressive push for GM crops

By Bharat Dogra Thanks to the courageous resistance of several leading scientists who continue to speak the truth despite increasing pressures from the powerful GM crop and GM food lobby , the many-sided and in some contexts irreversible environmental and health impacts of GM foods and crops, as well as the highly disruptive effects of this technology on farmers, are widely known today.

Swami Vivekananda's views on caste and sexuality were 'painfully' regressive

By Bhaskar Sur* Swami Vivekananda now belongs more to the modern Hindu mythology than reality. It makes a daunting job to discover the real human being who knew unemployment, humiliation of losing a teaching job for 'incompetence', longed in vain for the bliss of a happy conjugal life only to suffer the consequent frustration.

Stands 'exposed': Cavalier attitude towards rushed construction of Char Dham project

By Bharat Dogra* The nation heaved a big sigh of relief when the 41 workers trapped in the under-construction Silkyara-Barkot tunnel (Uttarkashi district of Uttarakhand) were finally rescued on November 28 after a 17-day rescue effort. All those involved in the rescue effort deserve a big thanks of the entire country. The government deserves appreciation for providing all-round support.

'Restructuring' Sahitya Akademi: Is the ‘Gujarat model’ reaching Delhi?

By Prakash N. Shah* A fortnight and a few days have slipped past that grim event. It was as if the wedding preparations were complete and the groom’s face was about to be unveiled behind the ceremonial tinsel. At 3 PM on December 18, a press conference was poised to announce the Sahitya Akademi Awards .

The war on junk food: Why India must adopt global warning labels

By Jag Jivan The global health landscape is witnessing a decisive shift toward aggressive regulation of the food industry, a movement highlighted by two significant policy developments shared by Dr. Arun Gupta of the Nutrition Advocacy for Public Interest (NAPi).

The illusion of nuclear abundance: Why NTPC’s expansion demands public scrutiny

By Shankar Sharma* The recent news that NTPC is scouting 30 potential sites across India for a massive nuclear power expansion should be a wake-up call for every citizen. While the state-owned utility frames this as a bold stride toward a 100,000 MW nuclear capacity by 2047, a cold look at India’s nuclear saga over the last few decades suggests this ambition may be more illusory than achievable. More importantly, it carries implications that could fundamentally alter the safety, environment, and economic health of our communities.

Epic war against caste system is constitutional responsibility of elected government

Edited by well-known Gujarat Dalit rights leader Martin Macwan, the book, “Bhed-Bharat: An Account of Injustice and Atrocities on Dalits and Adivasis (2014-18)” (available in English and Gujarati*) is a selection of news articles on Dalits and Adivasis (2014-2018) published by Dalit Shakti Prakashan, Ahmedabad. Preface to the book, in which Macwan seeks to answer key questions on why the book is needed today: *** The thought of compiling a book on atrocities on Dalits and thus present an overall Indian picture had occurred to me a long time ago. Absence of such a comprehensive picture is a major reason for a weak social and political consciousness among Dalits as well as non-Dalits. But gradually the idea took a different form. I found that lay readers don’t understand numbers and don’t like to read well-researched articles. The best way to reach out to them was storytelling. As I started writing in Gujarati and sharing the idea of the book with my friends, it occurred to me that while...

Search This Blog