Question

Analyze the GDP growth of India in the past one year (2016-2017) &

Discuss how variation in growth has impacted Cement company’s profitability with reasons

and details in india

Answer 1

• India GDP growth rate slowed to 6.1% in the fourth quarter of 2016-17 from 7% in the preceding quarter, mirroring impact of demonetisation on key sectors. The Central Statistics Office maintained its earlier full-year growth estimate for 2016-17 at 7.1% on top of revised 8% growth in the previous financial year. This is because of the government expenditure forming nearly one-third of the incremental GDP. Though, The International Monetary Fund's World Economic Outlook expects global growth to be at 3.1 per cent in 2016 and 3.4 per cent in 2017. At 7.1 per cent India's economy is growing at a significantly faster rate. Private investment as a percentage of GDP has been falling over the last five years. It is now down to around 29.08 per cent of the GDP.In 2015-2016, private investment was at 31.2 per cent of the GDP, from where it is expected to fall to 29.08 per cent of the GDP in 2016-2017. Private investment is estimated at Rs 35.35 lakh crore in 2016-17 in comparison to Rs 35.41 lakh crore in 2015-16, down by 0.2 per cent. The govt expenditure is estimated to be at Rs 13.95 lakh crore in 2016-2017. It was at 11.27 lakh crore in 2015-2016.The government expenditure has jumped from 9.93 per cent of the GDP in 2015-2016 to 11.48 per cent of the GDP in 2016-2017. We can overall conclude that, in a slow growth worl, the GDP growth of India(2016-2017) is preety good and it is grwoing at a significant rate.
• In last ten years, the cement sector in India has recorded a Compound Annual Growth Rate(CAGR) of 8%, against the world cement industry avg.of 3.5%. The cement industry in India is constaly outperforming developed countries like US and Japan and also has become the second largest cement producer after China in the world. Domestic Cement Growth has surpassed the economic growth rate for the past 3 years. The cement demand in India is approx 1.5 times the GDP growth. Over, the last few years, Indian Cement Industry witnessed strong growth with demand reporting CAGR of 9.3%. The main factors prompting the growth in demand, increased investment in infrastructure by both private and govt. sector.Cement Industry includes in Manufacturing Sector which employed 25.5 million people or 25.25% of total workforce. With increase in GDP over the period, the demand for cement is continuously increasing which led the Indian cement industry to increase their production capacity. Indian economy grew by 5.4 percent in 2001-02 , this growth supported by 3.3 percent growth in industry. With GDP/capita (2011 est.) US$3700, the total capacity of cement industry was 365.5Mt/yr.The Indian cement industry grew by 4.4% in 2011.and throughout 2012 significant cement capacity continued to come on stream in India.­ The rate of growth over the past 20 years has been phenomenal. Since 1992 India's cement production has more than quadrupled from around 50Mt/yr to 220Mt/yr in 2011.