For almost nine months, I have been waiting for this single press release even as two pundits offered five opinions on when India will emerge out of the latest 'recession' (Ask the pundits how a 6% plus GDP growth rate can be categorised as recession!). Even in July, 2009, when it was reported that industrial growth grew at an unexpected 7% or so, I had my doubts. Even when the Prime Minister, the Finance Minister, the RBI and sundry other oracles pronounced that the bad times are finally over, I was sceptical. And yes, even when the automobile industry reported higher sales of two wheelers and cars month after month since January, 2009, I wasn't very sure. But finally, a press release of September 2, 2009 has cleared all my doubts and I can add my two bit of pseudo-wisdom and say decisively that the bad times are finally over. For the second consecutive month, Tata Motors has reported a positive growth in the sales of medium and heavy commercial vehicles. In July, 2009, they grew at a modest 5.5%. And in August, 2009, they have registered an almost double digit growth rate of 9.6%. Yes, I am talking about the sale of trucks – the mini and maxi monsters of Indian roads that carry two thirds of goods transported across India. Don't ask me to explain the esoteric theory and jargon of how a growth rate in truck sales means that the Indian economy is back on track. It is. Suffice to say that when businessmen buy more trucks, they are confident that more goods will be produced, transported and sold across the country. Equally important, when businessmen buy more trucks, it means that banks and financial institutions have again started lending money to them (Even billionaires don't buy trucks by paying cash down). Even during the last two 'recessions' – after the East Asian meltdown of 1997 and the dot com meltdown of 2001, economic recovery was confirmed and gathered momentum only when actual sales of trucks started growing. And yes, the Indian Railways did miss freight targets for the first five months of fiscal 2009; but freight traffic actually grew by close to 10% despite a crash in iron ore business. In fact, railway freight grew almost 12% in August, 2009.
There is a little more than truck sales and railway freight to confirm my hunch that the economy is now well and truly bouncing back. The cement industry reported an 11% growth in despatches and sales in July, 2009. The steel industry reported a 6% growth in despatches and sales. What does that mean if you ignore the jargon and the number crunching? It means that more roads, houses, plants and other things that need cement and steel are being built across India. It means that, in spite of the poor monsoon, there is simply no way that the economy will grow at anything less than 6% in the current year. And do remember, this is despite both exports and imports shrinking by almost a quarter as compared to the last fiscal year.
So does that mean the Indian consumer will start splurging again and we are heading back towards the heady days of 2006-08? I won't bore with analysis, apart from providing a small piece of statistical evidence. In August, 2009, India imported just about 12 tonnes of gold – 98% less than the amount last year. Yes, 98% less! What does it say about consumer confidence in India?!
There is a little more than truck sales and railway freight to confirm my hunch that the economy is now well and truly bouncing back. The cement industry reported an 11% growth in despatches and sales in July, 2009. The steel industry reported a 6% growth in despatches and sales. What does that mean if you ignore the jargon and the number crunching? It means that more roads, houses, plants and other things that need cement and steel are being built across India. It means that, in spite of the poor monsoon, there is simply no way that the economy will grow at anything less than 6% in the current year. And do remember, this is despite both exports and imports shrinking by almost a quarter as compared to the last fiscal year.
So does that mean the Indian consumer will start splurging again and we are heading back towards the heady days of 2006-08? I won't bore with analysis, apart from providing a small piece of statistical evidence. In August, 2009, India imported just about 12 tonnes of gold – 98% less than the amount last year. Yes, 98% less! What does it say about consumer confidence in India?!
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