The Economic Survey on Thursday unveiled a six-point strategy including rapid closure of failed companies to further industrial recovery which has registered an impressive 5.3 per cent growth during the first eight months of this fiscal.
While the Index of Industrial Production (IIP) has displayed some definite signs of a pick-up during April-November 2002 on account of a revival in capital goods, steel and cement, the Survey said the outlook for industrial growth would depend on the evolution of economic policy framework.
Continued progress on infrastructure, movement towards low and uniform customs tariff, move to VAT, reform of labour laws, elimination of small scale reservation and framework for swift resolution of failure were six elements which, it said, would foster productivity and industrial growth.
The Survey commended India's success in export of services, based on strengths in higher education and access to low cost manpower, but cautioned that though encouraging signs of success in manufacturing exports were visible in 2002-03, "a strong surge of export-led growth in labour-intensive manufacturing could come about if key policy ingredients are put in place".
Referring to the improved industrial growth, it said an important feature was the success of textile products which, after a decline of 2.5 per cent in the previous year, showed a sharp turnaround with a growth of 14.8 per cent in the current fiscal up to November 2002.
A significant factor influencing the recovery was the high growth in garment exports as also other industry groups such as those of beverages, tobacco, food products, metal products and basic metal and alloy industries.
Use-based classification shows that in addition to the capital goods, consumer non-durables was also an area showing sharp growth, an acceleration to 12.7 per cent during April- November 2002 from a mere 3.2 per cent growth in the year ago period.
Even though the industry overall was showing signs of a recovery, the Survey said stagnation in industrial investment, despite a marginal improvement this fiscal, continued to be a "major factor influencing the lower industrial growth".
While the data shows sluggish investment demand in 2002 with much lower values than those seen during some of the previous years, there has been a marginal improvement in the proposed investment through the Industrial Entrepreuner Memorandums (IEMs) in 2002 which stood at Rs 91,291 crore compared to Rs 91,257 crore in 2001.