)
Business Cycle Indicator (BCI), a new index which is a lead indicator to Index of Industrial Production (IIP), grew moderately by 4.4 per cent in October compared to same month previous year -- much below the normal trend.
"This is much below the growth rate of 10.1 per cent attained during the previous peak before the slowdown began," said the monthly report released by ZyFin, a financial information and content company.
The firm said, as a result, the IIP numbers are not expected to reflect business momentum over next two months.
In September, the index grew by 4.5 per cent. The firm said that the BCI has been growing at an average rate of 4.4 per cent since August this year which is better than the average growth of 2 per cent attained in same period of 2012. But this is still much below its long term average of 7 per cent, since 2005, the firm added.
Surjit Bhalla, Senior Advisor, Zyfin Research said, “It is steady, sluggish growth. With each passing month, even a 5 per cent growth in GDP for FY 14 seems a difficult target." The government expects the GDP to grow 5.4 per cent in the current financial year.
The reasons cited by the firm for a sluggish industrial growth included borrowing costs and constricting money supply along with slowdown in the intermediate sector producing key raw materials.
Almost 50 per cent of the indicators that constitute the leading indicator had weakened in October, according to Zyfin. Few of them included declining domestic air passenger traffic and fall in aluminum production, noted the firm.
However, there was a rise in container cargos handled in Indian ports, electricity production and revenue earnings by the railways from freight carriage.
“The Indian business environment continues to appear pessimistic. Two trends that will have a direct impact on the pace of recovery in the business cycle are, sustained consumer demand, and improvement in the service sector revenues.", said Debopam Chaudhuri, Vice President of Research and Development at Zyfin.
