Industrial growth has improved due to the capital outlay by the government of India. The corporate houses have also expected improvements as per the trends in consumer demand and the festive season. Indicating the decrease in the inflation rates in India. Even the companies intended to embrace the positive outcomes per the margins and consumption in the upcoming 3 to 6 months.
According to the data shared by ETIG, the price of most commodities has decreased and will return to the initial prices in June 2021. For instance, cement prices are reduced by 11% (Since May), steel prices are reduced by 20% (since March), Crude oil prices are lower (since quarterly peak levels), and refined palm oil costs are down by 22% (since May). However, there is a cut down by a third from last November in the costs of ABS plastics. Natural gas costs have also fallen by 10% since the hikes in June. It is quite feasible to say that the current inflation rate in India will reduce soon in the upcoming months.
Statements by Some Top-Notch Indian Directors
Anuj Poddar, Executive Director, Bajaj Electricals, stated that there is a drop in the commodities and lag impact, which will, in return, benefit the demand and margins. Also, the price drop of Aluminium, Copper, or steel is quite a relief.
He also said that CAPEX investments will show recovery but will take a long time. However, the consumer’s actions will improve the economy because the higher the consumption, the higher the growth.
Further, he firmly believes that in Q3, there will be an improvement in the market as festivals start early in 2022.
Seshagiri Rao, Joint Managing Director, JSW Steel and Group Chief Financial Officer, stated that corporates had not made any changes to the guidance of profitability for the upcoming months because once profit is a loss of another company.
For example, the real estate industry and infrastructure have been proven strong in terms of growth in the industrial sector. The CAPEX programmes of both the Central and State government are progressive and have increased India’s export services. In India, the electronic appliances and packaging sectors are doing great. However, the FMCG sector has shown stress in terms of volumes. The rural sector is also picking up with the good monsoon season.
Further, he added, RBI’s decision to continue the supply of money to control the inflationary pressures is good. However, due to geopolitical effects, energy prices may rise as all the countries are interconnected and cannot remain unaffected beyond a point.
Ritesh Tiwari, Chief Financial Officer at HUL, stated that if the price of a commodity like a palm oil and other items stays low, then there is an expectation of improvements from the quarter of December that will release the inflationary pressure.
The inflation rate in India in 2021 was 5.13%. However, the current inflation rate in India was moderated to 7.01% in June 2022 compared to the past inflation rate of 7.04% in May 2022. The change in the average inflation rate in India confirms that the peak time has passed, and there will be ease for all the citizens of India.
