Apr. 20 – Steel output and a revival in the auto, housing and rural infrastructure sectors for Q1 in India point to a turning point for India’s economy, while other steel producing countries have seen a continuing downturn. India’s steel industry production and consumption grew at 1.2 percent and 3.8 percent respectively over the same period last year, according to The Economic Times.

The increase was spurred also by Chinese demands, with a 17 percent surge in iron ore exports to China in March, up to 12.6 million tons from 10.8 million tons in March 2008, a major indicator that China’s massive economic stimulus plan is starting to have an effect on development projects within China and boost its economic performance and GDP in the wake of the global financial crisis.

India’s major steel companies, SAIL, Tata, Essar and JSW are all operating at capacity, and include significant increases in steel for the construction industry, and particularly in rural areas, signs that India’s own stimulus plans have been having a positive effect. Tata Steel posted a staggering 45 percent growth in sales last month, reaching an all-time high of 5.375 tons for the month alone.

However, economists disagree on the sustainability of the results. Some are suggesting that India’s figures are due to government and business wanting to show strong figures for the end of the current financial year (March 31st), while some analysts suggest China’s stockpiling of iron ore will see a decrease in purchasing over the short term as it looks to absorb these reserves.

India meanwhile has not been as hit as hard as China in the economic downturn. A still affluent and increasing domestic market has remained buoyant, with exports accounting for about 18 percent of India’s annual GDP growth meaning a slowdown in overseas demand has not been as severe an issue. China however has yet to demonstrate it can kick start spending in its rural areas, while its economy remains less balanced – 40 percent of China’s GDP is derived from the exporting of product and this sector has been seriously damaged by the decline in orders. Nonetheless, with both countries poised to provide GDP growth of between 6 – 7 percent during 2009, opportunities for development and a bucking of the general global situation are evidently apparent in both nations.