According to the economic think-tank Centre for Monitoring Indian Economy (CMIE), major industry sectors, which have been languishing for a long period, have posted handsome gains. Cement production increased by 27 per cent while steel, which recorded a 1.8 per cent decline during 1998-99, showed a positive growth of 1.5 per cent during April.

A recovery was evident in the automobiles sector also with growth first noticed in the two-wheeler segment, later expanding to the passenger cars and commercial vehicle segments, according to the review which said the latter segment grew over 28 per cent. The capital goods sector which has clocked a double digit growth last year is also doing well.

The total tax collection for the April-May period was 21 per cent higher than it was in thecorresponding period of last year, CMIE said. Petroleum consumption has spurted 12 per cent in April 1999, as against a six per cent growth in the whole of the previous financial year. Even crude oil production was up in April after a consistent decline in 1998-99, CMIE said in its monthly review of the Indian economy.

Moreover, thermal power generation was up 11 per cent in April, covering up the fall in hydel generation. Inflation also has remained under control with the wholesale price index (WPI) rising only four per cent in May, though the consumer rice index is still high at over eight per cent, CMIE said.

The review said the India Meteorologicl Department has forecast a normal monsoon, adding this increases the probability of a good kharif crop which in turn is expected to spur domestic consumption and spending.

However, the outlook for investments in the country would continue to be bleak in the current fiscal also, despite signs of recovery shown by the economy during the first two months, theCMIE has said. The primary new issue market continues to be depressed with companies unable to raise funds for expansion and diversification.

CMIE said political instability following the loss of confidence of the Vajpayee government and the military action in Kashmir did not augur well for India's balance of payments (BoP) situation, CMIE said, terming the rupee's weakening in the wake of Kargil air strikes as an ``unfavourable development.'' The rupee has already fallen below the 43-level against the dollar.

However, the overall BoP position remained strong with the forex reserves going up by $ 1 billion to $ 30.6 billion as on May 28, CMIE said. Net investments by foreign institutional investors (FIIs) remained high at $ 600 million during April-May 1999 as compared to $ 243 million in the same period of 1998, according to the review.