Signs of Recovery Emerge

The

preliminary estimates on the national economic growth, released by the Central

Statistical Organization, indicate that the per capita income, national income

and the gross domestic product for the current year have risen over last year’s

levels.

One needs to keep in mind that these are ‘’preliminary

estimates" and have to be taken for what they are. And yet, in the midst of

all the slackness that the market has been experiencing so far, this piece of

news offers a glimmer of hope.

But on the international front, there seems to be no

agreement on whether the recovery has begun. Microsoft chief, Bill Gates, for

instance, says that there would be no recovery in 2002. Speaking at the World

Economic Forum in New York, he said that cuts in corporate capital spending may

keep the economy moving sideways in the in the current year.

On the other hand, HP CEO Carly Fiorina predicts a economic

recovery in the second half of 2002. Her prediction is based on the

higher-than-expected sales and earnings for HP for the quarter ended December

31. A nominal increase in consumer demand for personal computers and efforts at

cost cutting have led to the improved results of HP and in turn, these

developments have given the confidence to Fiorina to predict a recovery.

When seen in their right perspective, the predictions of

these two industry stalwarts reflect more or less their status in the market.

For Gates, in the light of sluggish sales of Windows XP, its latest offering,

the sideways movement of the market in the current year, looks more realistic.

At the same time, for Fiorina, who has to push HP’s merger

with Compaq with all the gusto that she can muster, the need of the hour is to

talk positive and ensure that the merger happens for sure.

Be that as it may, there are a few other indicators which

point towards recovery in the market. For instance, Lam Research, a leader in

etch equipment, says that it is seeing signs that chip-makers are once again

buying new production equipment.

Elsewhere, a report published by the US department of

commerce, says that the number of Americans using the Web grew by 26 million

between August 2000 and September 2001. This is a huge number and the massive

growth in the Internet usage has certainly a positive effect on the penetration

of PC which is already high in the US.

What is striking is the fact that the Internet usage grew by

25 percent annually among lower income Americans in comparison to 11 percent

among highest income households. This contrast clearly indicates that the

Internet usage is driving PCs to more homes in the US.

Growing Internet usage will be the driving force for PC

penetration in the Indian marketplace as well. And if the Finance Minister,

Yashwant Sinha, can play his cards well in the Union budget for 2002-03 to

stimulate demand among corporates by increasing the depreciation limit to 80

percent if not 100, then recovery should be happening for real.