Day after day, in virtually industry after industry, we're seeing a lot better financial results than ever imagined just a few months ago. In other words, Yashwant Sinha's much-promised recovery had just about begun, although a few months later than he said it had. Contrast this with the fact that the investment climate remains sluggish, and has now deteriorated dramatically, and you know that our politicians have set back the recovery process by several months, perhaps even a year or more.

Political uncertainty during the last few years, for instance, has sharply reduced fresh investment growth. The real growth in gross capital formation, the private data-bank CMIEestimates, has gone down from 23 per cent in 1994-95, to 8.5 per cent in 1996-97 and 3 per cent in 1997-98.

As expected, sectors like pharma, software and fast moving consumer goods are leading the upswing in the fortunes of the Indian corporate sector. Yet, it's not just them that are showing better results this year -- oil, refining, and consumer electronics have started showing better results. And, as an indication of better things to come, the steel and aluminium companies have begun withdrawing all discounts they had been giving, the surest sign of economic activity picking up. ``If there is one factor which is going in favour of the markets, then that's encouraging corporate results. Otherwise the markets would have just collapsed,'' said a fund manager with GIC Mutual Fund.

The performance rally this year has been flagged off by none other than Reliance Industries. The largest comany in the private corporate sector churned out a three per cent growth in net profit to Rs 1,704 crore. That'scommendable at a time when the company faced a demand recession, overseas dumping and slow growth in textiles. ``There are volumes in the Indian market but not necessarily margins,'' Reliance managing director Anil Ambani said (after announcing the results on Thursday) and pointed out that prices had to be extremely competitive if market shares have to be maintained.Software is the biggest story on the markets these days. With almost all software companies registering a 50 per cent plus growth in profits, investors are lapping up software shares with renewed vigour. Infosys Technologies, which is setting the pace for others in the field, has put up a scintillating show with its net profit jumping from Rs 60 crore to Rs 135 crore. Riding on the software boom, Infosys's counterparts like Satyam Computers, NIIT and Pentafour have also clocked huge profits.

The performance is not restricted to the three select groups (pharma, software and FMCG). Madras Refineries has announced a higher net profit of Rs 211crore as against Rs 129 crore in the previous year. Philips India, which made a loss of Rs 10.61 crore in the first three months of 1998, made a profit of Rs 4.46 crore in the same period of this year.

``The two main divisions of the company -- lighting and consumer electronics -- witnessed growths of 18 per cent and seven per cent respectively compared to eight and five per cent respectively last year. This is an indicator of the industry's situation now,'' said a fund manager.

The recent move by aluminium companies is also being debated by analysts and brokers about the reversal in the price fall and demand recession. Hindalco of the Aditya Birla group and public sector Nalco have withdrwan all discounts on their products and hiked the prices. Another sector which has showed improvement is the controversial steel sector. Steel consumption has gone up by three per cent to 23.4 million tonnes in the financial year 1999. A company like Mangalore Chemicals and Fertilisers (MCF) which was in the red for manyyears made a profit of Rs 30 crore as against 17 crore previously.

Banks -- despite saddled with huge non-performing assets -- are also coming out with impressive results. ICICI Bank has made a 26 per cent growth in profits to Rs 63 crore in the year ended March 1999. HDFC Bank has also made similar profits.

To be sure, no one's expecting a dramatic corporate turnaround, and it is generally true that the best results come out first while the worse ones come out later. It's also almost certain that many segments like textiles, steel and petrochemicals are likely to wash their balance sheets with red ink. Yet, the results which have come in do show that the recovery process was definitely under way. With the last fortnight's political developments though, it's certain that the investment recovery is going to be a long distance away.