Growth comeback a far cry?
The month of April also reflected a rise in the holdings of raw materials and semi-manufactured goods for the first time in five months. The good news was the steady momentum the manufacturing sector has managed to maintain. In the face of low demand, manufacturers are striving to find new ways to keep the costs down. They will continue to strive. Diesel price rose in May. Gas price is set to rise. Both possess the ability to affect the already stricken automotive and equipment sectors, the manufacturing sector as a whole, striking down any signs of a recovery. Recovery may not show up after all, before the middle of next year.
Policies by the new government will take time to reflect. A strong and stable government is welcome. The need of the hour is for an efficient government. A government that will diligently drive growth, effectively implement policies, and trigger a positive change. The bruises inflicted on the manufacturing sector will take time to heal. For the sector to recover, it will take until mid-2015. Challenges will continue to mount. The Rupee advantage has opened opportunities for global sourcing. Manufacturing costs in China are rising. Currency advantage and quality suppliers are attracting global attention. There is a need to take full advantage of such an opportunity. This will arise the need for better infrastructure, followed by a need to recreate a favourable economic environment. The same may not arrive until mid-2015. Subsequently, demand will return around the same time. Manufacturers till then will face turbulent weather, making it even more imperative that they tap every opportunity they get, big or small, continue to adapt to changes, and sustain. The only solace at this moment is the easing of inflation. The RBI is however not ready yet to take down its inflation guards. Another indicator is that growth will take until mid-2015 to return to the manufacturing sector.