Is it true that order flows have been robust for Indian companies in the June quarter?

The good news is that there is some indication of a pick-up in economic activity in terms of order flows. Normally, order flows are considered a good lead indicator of economic pick-up and that was evident after 7 Indian companies bagged orders worth Rs.42,000 crore in the first quarter ended June 2020. This hints at a better economic performance next quarter.

Most of these orders were to construction firms and capital goods companies with orders flowing from the government and from abroad. This is important because both these sectors of capital goods and construction have much larger downstream multiplier effects and their impact on GDP growth is a multiple of the sectoral growth.

These orders include orders for solar projects and pipes in the US as well as power station projects in West Asia, Eastern Europe and Africa. It has been reported that states like Uttar Pradesh, Telangana, Maharashtra and West Bengal have awarded large contracts in the area of water supply, irrigation and regional rapid transport systems (RRTS).