BS reported that Indian domestic steel sector is going through an unprecedented slowdown and the government sees no silver lining in the horizon.

As per report, the Indian ministry of steel has painted a bleak picture of the sector in the next Five Year Plan period (2012-17) beginning this April. It has predicted a demand growth that would be lower than even that during the tenth Plan, while pegging production only a notch higher. Also, both the growth indicators would just be marginally up from the current Plan achievements.

Both production and consumption of steel during the current Plan period at 5.8% and 8.8% respectively were significantly lower than the 9.4% and 10.4% during the 10th Plan period. The government expects a modest 9.1% growth in consumption through 2017, even assuming a high gross domestic product growth rate of over 8% against 8.8% over the past five years.

A host of issues, including a historic low demand, supply constraints at the back of a lull in commissioning of Greenfield projects coupled with a severe raw material crunch from the ongoing crisis in coal and iron ore sectors, has brought down the sector's growth to an all time low.

According to the government's working group for the twelfth Plan, chaired by the then steel secretary Mr PK Misra said that "The prospects of domestic demand appear grim and gloomy on the eve of launching the 12th Plan.”

The body states in its recent report said that "Also, all the macro economic indicators point out the onset of overall economic slowdown of the Indian economy which will have a profound impact on investment.”

(Sourced from BS)