Unfortunately, we are today in an unenviable situation with regards to the economy, with bad news and disappointing economic indicators popping all around us everyday. Not a day passes without new job losses and factory shutdowns being announced, and literally every new day brings to us signs of sickness in a new industry sector. It is now quite apparent that we have been experiencing a slowdown for the last two-three years, but it is only now, that it has become impossible to cover it up anymore. In fact, so strong was our denial of the downturn, that the recent budget, by its very design and by its assumptions and provisions refused to even so much as recognise that there was anything wrong at all. One will recall, that in our comments on the budget last month, we termed it an Utopia!
Be assured, that we are not here this day, to give our readers a lowdown on the slowdown. Our interest continues to lie in healthy cement consumption, and by corollary, we are also interested in things like construction and infrastructure. Even here, sadly we have but no good tidings to offer. It is no secret that the real estate in particular, and the construction industry in general, has been limping for sometime now. However, roads and metros were going strong so far, and were positive factors which helped redeem our infrastructure sector till recently. This has now received a body blow, by way of a letter from the PMO to NHAI, advising the latter to focus on asset management and refrain from taking on more debt for building more and more highways on EPC basis. Clearly, the government has lost appetite for direct investment into infra sector, and private investments are not forthcoming. All in all, we are probably looking at a lull in infra-building.
The emerging scenario is not pleasing - not for the cement industry, not for any of us, although the industry seem to be putting up a brave face. GDP growth estimates are being downgraded everyday by various expert bodies, the latest estimate being 5.5 per cent for the full year. Crisil has just now projected that cement consumption growth will be halved this year. To about 5 per cent, and to us, that really sounds optimistic. Just as the talk about $5 trillion economy in five years sounds like a sweet dream, if not a pipe dream.
Sumit Banerjee Chairman, Editorial Advisory Board