Almost 60% of gross domestic product comes from private spending, according to estimates from New York-based CEIC Data Co, with the pick-up helping to fuel growth of more than 7% this year, making India the world’s fastest-growing major economy. Yet the performance isn’t uniform across all industries, with the banking and power sectors facing distress and global trade tensions clouding the outlook for exports.
Here’s a detailed look at which sectors are ticking and those that are ailing:
The auto industry is on a strong footing. While demand is broad-based across markets, rural India appears to be doing particularly well, which is reflected in sales of two-wheelers and tractors. Companies such as Maruti Suzuki and Ashok Leyland are taking advantage of stronger demand by passing on higher prices to consumers.
“Rural India appears to be doing particularly well, which is reflected in strong growth in the two-wheeler and tractor industry,” analysts led by Hitesh Goel at Kotak Institutional Equities said.
If the automotive sector is doing well, can oil be far behind? India’s energy appetite is surging, courtesy of its expanding middle-class and unrelenting demand to power a growing fleet of trucks, cars and motorbikes. The government’s push for cleaner air by encouraging the use of cooking gas is driving refiners and attracting global majors such as Saudi Arabian Oil Co. to Rosneft PJSC.
However, an over-dependence on imports makes the nation vulnerable to a sustained spike in oil prices that can chip away at demand.
Another bright spot is the sector for fast-moving consumer goods, which is ranked as the fourth-largest in the economy by think-tank India Brand Equity Foundation. It’s recovered well from the demand-disruptive and chaotic introduction of a consumption tax last year. Analysts see additional support for the sector coming from higher wages for millions of government workers as well as expectations of a recovery in farming due to higher guaranteed prices for some crops and a pick-up in public spending ahead of elections.