Editorial     

Published: November 15, 2023
Updated: November 15, 2023

Economy bucks global slide

The new Vikram Samvat 2080 has started on a cheerful note for the Indian economy. In its auspicious moorat trading on Dalal Street, the stock market put up a buoyant show with the Sensex, the popular stock market index and the benchmark of the Indian economy, shooting up by 355 points from 64,904 on November 10, 2023 to 65,259 in moorat trading. The buoyancy continued and on November 17, it scaled a new all-time high of 65,795. Likewise, Nifty, the darling index of analysts, climbed up from 19,425 on November 10 to 19,526 in moorat trading and moved up further to 19,732 on November 17.

Despite worrisome global geopolitical issues – particularly the Israel-Hamas conflict and the prolonged Russia-Ukraine war — the buoyant trend in the stock market is being attributed to favourable reports from various industry sectors. The information technology sector, which was in danger of facing pressure from the North American economic decline, has turned distinctly robust. Sector leaders like TCS and Infosys put up heartwarming shows for the first half of the current fiscal and almost all 17 leading companies showed positive results. Of late, the sector has shifted to more modern technologies like cloud computing, artificial intelligence, machine building and Internet of Things. For its part, the Indian government has initiated several programmes to encourage the development of these technologies and several Indian IT companies have been making significant investments in these fields.

The automobile industry, which accounts for 7 per cent of India’s GDP, employs millions of workers and contributes substantially to the country’s economy, has started the new Vikram Samvat with a bang. The industry, which was facing several headwinds, including decreased demand, adverse regulation changes and a distinct move towards electric vehicles, is now in a cheerful mood. Thanks to the bumper demand during the Diwali festival, the passenger car industry has sold as many as 3.47 million units during the first 10 months of 2023, as compared to 3.19 million units sold in the corresponding period last year.

Industry circles expect total auto sales this year to be 4.15 million units. Despite the precarious geopolitical situation, the demand momentum remains strong, indicating the resilience of the domestic market. For instance, during the festive season from Onam to Bhau Dooj, sales of passenger vehicles are reported to have crossed the one million mark, indicating a growth of 18 per cent over the previous corresponding festive period.

Other categories, including sports utility vehicles (SUVs) and two-wheelers, are also attracting good demand. And as far as commercial vehicles (CVs) are concerned, sales may hit a new peak by the new fiscal year starting from April 2024 amid robust demand from construction, mining and other segments. In fiscal 2023, the CV market had surpassed the 2018 peak with 9,62,000 vehicles sold as against 8,56,000 vehicles in fiscal 2018.

What is more, overall the automobile industry has succeeded in overtaking Japan to emerge as the third largest in the world after China and the US.

Of other sectors, the construction industry is coming into its own while the FMCG segment is in fine fettle.

Overall, the Indian economy, according to the Asian Development Bank, is expected to grow by approximately 8 per cent in the next 5-6 years, powered by increasing public investment in infrastructure and a pick-up in private sector investment. At a time when the global economy is in slowdown mode, the Indian economy is growing at the fastest pace globally. Little wonder that the Indian stock market has become the fifth largest bourse in the world and accounts for the highest market capitalisation.