Industry growth under threat
The Economic Survey has underlined the adverse impact of slowing down of the manufacturing sector, resulting in overall industrial growth becoming moderate, reports Deepak Joshi.business Updated: Feb 29, 2008 09:58 IST
The Economic Survey has underlined the adverse impact of slowing down of the manufacturing sector, resulting in overall industrial growth becoming moderate. It has called for removing infrastructural impediments and reviewing labour laws and labour market regulations, apart from proposing phase-out of control on sugar, fertilizers and drugs.
The Survey said that industrial sector recorded a growth of 9.2 per cent in the April-November period of this fiscal as against 10.9 per cent in the same period in 2006-07. For all of last fiscal year, industry grew 11.6 per cent.
Sectors like non-metallic mineral products, cotton textiles and textile products, automobiles, paper products and metal products have suffered from a significant slackening in growth during the current fiscal. Making a special mention of the downslide in consumer durables sector, the Survey said if the sector had grown at a pace at which it had grown in 2006-07, the overall industrial growth till November in the current fiscal year would have been close to that of the previous year, it said.
The Survey, however, pointed out that the slowdown in the sector may not be a cause for serious concern in the long run based on available data.
The growth of textiles, with very low import intensity, may have been affected adversely by the recent appreciation of the rupee against US dollar. Interestingly, the Survey has pointed out that while one segment of the automobile sector — commercial vehicles, jeeps and passenger cars — catalyzed manufacturing growth, the slup in the production of motorcycles dampened it.
The issue of lack of availability of sufficient number of skilled workers affecting the manufacturing sector has been stressed. This will facilitate research and development and technological innovations, which are urgently called for in important industries like chemicals, automotives and pharmaceuticals, it added.
Besides increase in wages, the skill shortage also manifests itself as a problem of retention and attrition in the fast growing knowledge based industries as well as in social sector services like health and hospitality.
Sectorally differentiated initiatives may be required for skill upgradation, supply augmentation of inputs and promotion of research and development.
“There is an imperative need to facilitate the growth of labour intensive industries, especially by reviewing labour laws and regulations. This is particularly important in reversing the current, not-so-encouraging manufacturing employment trends,” the Survey stated.
Inspite of setbacks, the Survey said there were sufficient reasons for sounding optimistic as there has been a commendable growth in capital goods sector. “The burgeoning direct investment inflows in the liberalized investment regime supplements the domestic investment to a great extent.,” it stated.