Tuesday, February 26, 2013

BIZ CLIMATE IMPROVES

Country's business climate has improved in February on account of robust production and government's reform initiatives, and the economy should return to a strong growth path by end of 2013-14 if current trend persists for a few more months, a new report says. The BluFin Business Cycle Indicator (BCI), that reflects various macroeconomic trends on a monthly basis, stood at 170.4 points in February, 4.2 per cent higher compared to the same month last year. The improvement suggests that the economy is growing at a faster rate than the previous year. Historically, the BCI has grown by an average of seven per cent year-on-year, financial information provider BluFin said today. Moreover, BCI has been indicating a reversal in the economic slowdown since July 2012 and expects that economic growth in India to gather momentum by the second quarter of 2013-14 financial year. "The key factors leading to the strong improvement (in February) were increasing foreign trade, rising production of intermediate goods, moderating international metal prices and policy reforms leading to shrinking expenditures, rising revenues and lower government borrowing," the report said. Additionally, indicators such as tourism and earnings from railway freight traffic have also shown a significant improvement compared to the same time last year. However, domestic air travel and a weak currency has impacted the growth. The index takes into account five broad areas - capital markets, foreign trade, policy, real economy and survey. "The sluggish upmove of the last few months is now turning into a genuine uptrend. BCI is suggesting that the long downtrend in Indian growth is close to an end. The Budget will obviously decide the next big move - but the BCI for February is strongly suggestive of a growth budget," BluFin Senior Advisor Surjit Bhalla said. "If the current BCI trend persists for a few more months, the Indian economy should return to a strong growth trajectory by the end of 2013-14 backed by solid fundamentals," he added.

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