Business climate improves in April, growth to pick-up by Q2

NEW DELHI: Business climate has improved in April on factors such as rising production of intermediate goods, including aluminium and iron, and the government's reform initiatives, according to a report.

The BluFin Business Cycle Indicator (BCI), which reflects various macroeconomic trends on a monthly basis, stood at 165.9 points in April, 5.1 per cent higher compared to the same month last year, suggesting that the Indian 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 financial year 2013-14.

The report pointed out some of the components with a "positive influence on the overall composite include falling international prices of crude, gold and copper and rising domestic production of intermediate goods such as aluminium and iron.

"The Government has helped boost infrastructural activities, leading to a consistent improvement in production of these intermediate commodities," it added.

However, slow revenue generation from rail freight, domestic air travel and agricultural exports have a negative impact on the growth.

"The latest numbers confirm that the economy bottomed a few months ago; the recovery is more than gradual, and if the Reserve Bank helps, industrial production growth can top seven per cent by the end of 2013," BluFin Senior Advisor Surjit Bhalla said.

"With rising instances of good governance in terms of controls on non-plan expenditure, improving revenue receipts and boost to infrastructural activities, coupled with declining international prices and domestic interest rates, the economy is expected to gather momentum soon," BluFin Vice President (Research and Development) Debopam Chaudhuri said.