It's confirmed. While the finance minister might have cheered investors, businesses and markets through intermittent iterations of committed governance, the impact on real industrial activity has been fairly insignificant. Cumulatively, growth in factory output has been less than one per cent, at 0.7 per cent, for the nine months of financial year 2013.
Industrial production for December fell
(-)0.6 per cent, compared with 2.7 per cent growth in December 2012. What's worrying is that, typically, the period between October and December is driven by high consumption.
But this festival season, Indian consumers decided to lie low - mired by uncertainty and inflation, they decided to hold back on buying refrigerators, cars, television sets etc. Contraction was seen across both capital (-0.9 per cent) and consumer goods (4.2 per cent).
Manufacturing declined (-)0.7 per cent again, largely influenced by policy uncertainty and painfully slow decision making and clearances.
India's largest industry association, the Confederation of Indian Industry (CII), termed the negative growth of the manufacturing sector extremely worrisome. "...the least we expect is that the Union Budget would not consider raising any taxes or duties and would refrain from introducing new taxes," stated CII Director General Chandrajit Banerjee, in a statement.
Besides the budget
, there is a lot of hope and expectation that the Cabinet Committee on Investments will deliver, and that it will fast-track clearances on pending investments and projects.
"While new project announcements have tapered off, existing projects are suffering with cost and time overruns indicating a need for improving and strengthening implementation in order to ensure project completion . The new Cabinet Committee on Investments also needs to consider and clear the pending projects within the shortest possible time," said Naina Lal Kidwai, President of FICCI, in a statement.
In terms of policy action, a slew of announcements have been made in the last few months. There was even a much-publicised road-show, where the finance minister
was seen and heard convincing international investors that the Indian growth story would not be frittered away. However, industry will be closely watching for cues on inflation, interest-rate cuts and how much of the talk translates into action.