Editorial July 2018

Today, India is the fastest growing economy attracting many international companies, financial institutions etc. It is natural that these companies would want to participate in the growing Indian economy. The fiscal 2017-18 was shadowed by currency ban first and then implementation of much awaited GST. One may debate the long-term necessity of these measures but its tremors felt immediately by the economy. Thus last fiscal performance of Indian economy was somewhat depressed. But now the industry and the economy seems to have recovered from the jolt and look, last quarter growth of Indian economy was 7.5 %. Further, it is expected that GDP growth for the next quarter will be better than this. This is surely a very encouraging signal for the economy as well as the industry. It also ensures a positive industry sentiment and an attractive environment for overseas companies and capital.

Here is a catch. A good GDP growth is good but not enough for a healthy growing economy. Let me explain this. GDP only tells you how much the economy has earned but it does not tell you who contributed to this earnings. Thus a handful big companies doing superlative performance may boost the GDP while rest of the economy may still be struggling. I think the Indian growth story is somewhat similar to this. Few mega companies are doing extremely well while most of the other companies, especially from MSME sector are fighting for survival. We all know that MSME sector is the backbone of any economy. It rolls the maximum capital and it generates maximum employment. Unfortunately this very sector is struggling for its existence. Stagnated markets, no access to soft capital, severe competition especially from China. This is the reason why Indian GDP growth is not accompanied by a similar growth in the employment index.

The situation in Indian steel industry is bit different. Here, the big ones are facing big problems (of course with few exceptions) and the small ones are sailing comparatively smoothly. I do not mean they have no problems but then one has to accept the cyclic nature of this industry. The secondary steel producing companies, somewhat smaller than the big ones, have emerged as the most important and relevant segment within the iron & steel sector.  They are contributing highest in terms of tonnage and also the employment generation. These mid cap companies are indeed the backbone of Indian steel industry.

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