E-Paper
Industry to sustain 7-8% GDP growth
The survey said the accent would be on containing the fiscal deficit and reforming the tax regimes.
Finance Minister P Chidambaram presented the Economic Survey on Wednesday, saying the high-growth momentum would have to be sustained. The survey said the accent would be on containing the fiscal deficit and reforming the tax and interest rate regimes, with the manufacturing sector powering the growth momentum.
On the macro-economic front, the survey projected a GDP growth rate of 7-8 per cent. It also indicated a higher interest regime and controlling the rising fiscal deficit through reforming the system of tax exemptions and curbing expenditure.
The survey also hinted at a reduction of customs duties — from 20 per cent to 16 per cent — primarily to make inputs for industry cheaper. It has also mentioned the necessity of sticking to the April 1, 2005 deadline for implementing value-added tax at the state level.
Industry figured in a big way in the growth push. A sustained 10 per cent growth rate in that sector was projected as the motor of growth. To achieve this, the survey promised to raise caps on foreign direct investment and open up more sectors to global capital. Technology transfer and market access would be encouraged by deepening trade reforms and an attempt made to adopt global business practices.
Reforms to open up the labour market would be pursued by building a political consensus, especially in view of the left's opposition to tinkering in that sphere.
The survey pinpointed the automobiles, auto components, textiles and engineering industries as the leaders in the growth push. Incentive packages were likely for these sectors in Thursday's budget.
A 4 per cent growth rate was the target for agriculture. Among the measures the survey contemplated to bring that about was encouragement of private investment, a focus on fisheries, horticulture, organic and commercial crops, and agro-processing industries. A rethink on minimum support prices was also on the cards.
Though the services sector contributes heavily to the GDP growth rate, no specific framework was proposed for its expansion.
The survey suggested a policy of continuing with the partnership between the public and private sectors to expand infrastructure, but it suggested extending the time-frame for reorganising inefficient state electricity boards. Exemptions on user charges for weaker sections were also proposed.
