Chennai, Sep 28 (UNI) India Cements Vice-Chairman and

Managing Director N Srinivasan on Monday said with the

economy worst hit due to the COVID-19 pandemic and the

subsequent lockdown, the revival in cement consumption

hinges on public spending and push to infrastructure in

big ticket investments.

In his address at the company's 74th AGM held through

video-conferencing, he said the Indian economy was the

worst hit among the major economies with the GDP growth

shrinking by an unprecedented 23.9 per cent in April-June

2020 due to the stringent COVID-19 lockdown.

He said the year began on a grim note with lockdown from

March 25 to restrict the spread of coronavirus severely

disrupting the economic activity.

'Indian economy is the worst hit among the major economies

with the GDP growth shrinking by an unprecedented 23.9 per

cent in April-June 2020 compared to the same period last

year triggered by the stringent lockdown related measures

during the quarter severely affecting the consumption',

he said.

In 2020, World Bank expects a significant contraction of

5.2 per cent in world economy, while IMF expects it to

shrink by three per cent, he said, adding, the Indian

economy was also expected to see a contraction of 3.2 per

cent to 6.8 per cent in GDP in 2020-21 with the lockdown

extending into the second quarter.

Mr Srinivasan said while the Centre has announced a series

of stimulus and monetary policy measures, they were largely

aimed at easing supply side constraints.

In its latest report, Finance Ministry said V-shaped recovery

(a quick down and then up) was seen in several high-frequency

indicators, including in terms of cement consumption, he

said.

Noting that revival in consumption hinges on public spending

and push to infrastructure, he said as the states relaxed the

lockdown measures, he said experts opine that the economy

was still facing downside risks to growth and the recovery in

demand mainly hinges on Government spending, especially

on infrastructure to revive private consumption.

The expected good rabi crop and the forecast of normal south

west monsoon augur well for the rural economy, he said and

exuded confidence that the Government would pursue the

ambitious plan to give push to big ticket investments in the

infrastructure projects identified across the sectors as part of

the National Infrastructure pipeline which has envisaged an

investment of over Rs.102 lakh crore over five years till 2025.

He said the 2020-21 budget has also proposed a new tax regime

for personal income with revised tax rates and has extended the

tax benefits for affordable housing. These measures were expected

to stimulate the housing and construction activity and improve the

cement demand with better prices.

Mr Srinivasan said in line with the weak performance of core sector

last year, growth in the cement sector also slumped to register a

marginal negative growth compared to a healthy demand growth of

13.31 per cent in 2018-19.

According to official estimates, last year, cement production declined

to 334.48 million tonnes from 337.32 million tonnes in 2018-19.

Apart from general economic slowdown, the cement demand was

affected post the general elections in May 2019 due to stalling of

some of the existing projects for review, extended monsoons, low

capital outgo on infrastructure and road projects, he recalled.

This was compounded by the stress in the financial sector and

thereby low growth in real estate and housing sectors.

'Though there was some recovery in cement demand from December’

2019, the momentum could not be sustained due to COVID-19 outbreak

and the nation-wide lockdown from March 25 which has paralysed the

construction activity', he said.

Stating that cement prices, which started improving from February 2019

went down after the first quarter of last year resulting in lower realisation

adversely affecting the bottom line, he said in March 2020 alone cement

production fell by 25 per cent.

The overall capacity utilisation at the all India level dropped to 74 per cent

from 78 per cent in 2018-19 and the industry in the South reported a

de-growth of around eight per cent last year reversing the turnaround reported

in 2018-19 with a robust growth of 19 per cent.

The region with capacity overhang, reported a lower capacity utilization of

around 60 to 62 per cent only as against 70 per cent the previous year.

UNI GV 1418