The government has identified the manufacturing sector to spur growth in the broader economy and offered major fiscal sops, including an across-the-board reduction in central value added tax (CENVAT) to 14 per cent from the existing 16 per cent.
The move found instant favour with India Inc and analysts who felt it was appropriate to boost industrial growth that slipped to worrisome levels in recent days due to a variety of factors, including monetary tightening and poor domestic demand.
“The manufacturing sector is the backbone of any economy. There is a need to give a stimulus to the manufacturing sector. Hence, I propose to reduce the general CENVAT rate on all goods from 16 per cent to 14 per cent,” finance minister P Chidambaram said in his budget speech.
Industrial growth slipped to 7.6 per cent in December 2007 from 13.4 per cent in the corresponding month of the previous year on account of widespread deceleration in manufacturing, mining and electricity, among other sectors.
Consumer goods, in addition to other segments of industry like basic goods and capital goods, also witnessed a slowdown in growth during the month, showed the quick estimates of the Index of Industrial Production (IIP) released today.
{{/usCountry}}Consumer goods, in addition to other segments of industry like basic goods and capital goods, also witnessed a slowdown in growth during the month, showed the quick estimates of the Index of Industrial Production (IIP) released today.
{{/usCountry}}The Prime Minister had recently constituted a high-powered group headed by National Manufacturing Competitiveness Council (NMCC) chairman V Krishnamurthy to suggest measures to ensure the continuing growth of the manufacturing sector in the country that have showed signs of a slowdown in recent months.