E-Paper
Survey for policy initiatives to attain 10% industrial growth
The Economic Survey listed rigidities in labour laws and distortions in indirect tax structure as major obstacles to faster growth.
Listing rigidities in labour laws and distortions in indirect tax structure as major obstacles to faster growth, the pre-budget Economic Survey on Wednesday asked Government to take suitable policy initiatives for attaining a challenging 10 per cent industrial growth.
"One of the most important challenges in Indian economic policy consists of devising strategies for obtaining industrial growth in excess of 10 per cent," the Survey presented in Parliament said.
Regretting that industrial growth has been below 10 per cent for several years now, it said the outlook for Indian industry is bright if "five major constraints" -- labour law rigidities, distortions in indirect tax structure, high customs tariffs, reservation for small sector and frictions in creation and closure of firms are addressed.
It, however, said belying considerable gloom that was about the outlook for Indian manufacturing in a globalised era the best firms of India have succeeded in realizing rapid growth rates in exports.
The Survey said growth for the industrial sector in 2003-04 continued to be healthy. The index for industrial production (IIP) grew by 6.9 per cent. Manufacturing, which has a weight of 80 per cent in IIP grew 7.1 per cent while mining grew by 5.1 per cent and electricity by five per cent.
At a two digit level classification as many as 12 out of the 17 industry groups have showed positive growth during 2003-04. In manufacturing, growth recovery has been sustained in the current year also for a number of sub-sectors.
Basic chemicals and chemical products except products of petroleum and coal grew 8.2 per cent in 2003-04, wood and wood products and fixtures grew 6.8 per cent.
Leather and leather and fur products showed a negative growth of 4.3 per cent. Other sub-sectors in manufacturing that showed negative growth were jute and other vegetable fibre textiles (-4.2 per cent), textile products including apparel (-3.8 per cent) and cotton textiles (-3.3 per cent).
However, the key industries of construction sector - steel and cement - showed a growth of 6.9 per cent and 6.1 per cent respectively in 2003-04.
The growth in capital goods sector was healthy with production increasing by 12.7 per cent in 2003-04.
Basic goods and intermediate goods industries grew 5.4 per cent and 6.2 per cent respectively.The consumer durables sector witnessed a growth of 11.6 per cent in 2003-04 as against the decline of 6.3 per cent in the previous year due to good monsoon and availability of retail finance.
The growth in consumer non-durables fell 5.7 per cent in 2003-04 as against growth of 12 per cent in 2002-03 as price wars cut into profit margins. Competition from local brands and inadequate coverage of IIP may be a part of the explanation for the poor performance of the sector, the Survey said.
On industrial investment, the Survey said after peaking at Rs 1,28,892 crore in 1999 the proposed investment declined in next few years. However, investment intentions increased to Rs 57,806 crore during January-April 2004 compared to 15,931 crore during corresponding period of 2003.
The foreign direct investment (FDI) in India has increased over the years peaking at $4.74 billion in 2000-01 and declined to $3.73 billion in 2002-03 and $3.57 billion by 2003-04. The amount of FDI approved also showed a declining trend from its peak of $9.89 billion in 2000-01.
The biggest FDI flows into India came from Mauritius (34.48 per cent) followed by US (16.56 per cent), Japan (7.63 per cent), the Netherlands (7.04 per cent) and UK (6.88 per cent).
The Survey also said Competition Commission has been set up under the Competition Act to prevent practices having an adverse impact on competition, to promote and sustain competition, to protect the interests of consumers and to ensure freedom of trade carried on by participants in the market for related matters.
