Nikunj Turakhia, President of SUFI
Demonetisation and GST once on track can lead growth in steel Sector
India currently being the world’s (third) largest producer of crude steel is expected to become the second largest producer by 2020. Post GST: Low GDP Growth – A Cause of Concern. The steel sector in India contributes nearly 2% of the country’s GDP and employs over 600,000 people.
The GDP growth fell to 5.4% per cent in the April-June period—-lowest in last three years.
“The manufacturing sector has dipped from 10.7% to 1.2% y-o-y. It is followed by finance and realty from 9.4% to 6.4%; with electricity, water supply and gas registering 10.3% to 7.0%.”There is cause of concern here as this shows significant manufacturing sector slowdown…
One of the reasons is destocking due to introduction of GST and leftover effect of demonetisation whereas, the steel sector showed positive growth backed by anti-dumping measures, robust exports, growth in infrastructure and auto sector.
Major issue has been the lack of confidence in the system. The gross fixed capital formation (GFCF) rose only 1.6% yoy. Work upon stability of policy and confidence building exercise need to be taken up as a priority. so that manufacturing bounces back strongly. The investment cycle needs to kick start.