E-Paper
Poor infrastructure retarding growth
The Indian economy is currently in a resilient mode but there is great opportunity for consolidating the momentum, writes Ballarpur Industries vice-chairman Gautam Thapar.
The Indian economy is currently in a resilient mode in terms of growth, inflation and balance of payments and there is great opportunity for consolidating the momentum with special emphasis on agriculture, manufacturing and employment.
Supported by strong economic fundamentals and an increasing demand in several sectors, the manufacturing industry is showing strong signs of resurgence.
Recent studies by the Confederation of Indian Industry indicate an overall increase in production, sales and exports. Of the 129 sectors reporting production, 26 sectors indicated a growth rate of more than 20% over previous year, 35 sectors indicated growth rate of 10-20%, 49 sectors indicated a 0-10% growth rate and 19 sectors indicated negative growth.
Of the 62 sectors reporting sales, 13 sectors registered excellent growth, 19 sectors indicated high growth, and 22 sectors indicated moderate growth while eight sectors indicated low or negative growth over the previous year.
While India's services sector is considered by many to be the future engine of growth and with the economic growth model being driven largely by services rather than manufacturing, there is no reason why India should not be perceived as a major centre for manufacturing as well.
The process of consolidating competitiveness in manufacturing has in a way already begun with the country becoming a base for export to third world countries.
World-class R&D facilities and increased implementation of state-of-the-art IT technologies are seeing the emergence of India as a global manufacturing hub. Lack of basic infrastructure, bureaucratic procedures, high-energy costs and multiple levies, however, inhibit the growth potential.
The Indian paper industry that has recently come back to the growth mode is a case in point. The paper industry is a major contributor to the economy with a turnover of Rs 12,000 crore and employing about 300,000 people directly and around a million people indirectly.
Rising GDP growth rates in the Asian region is providing a very strong platform for the future growth for paper. Industry experts estimate investments of over $40 billion in paper and paperboard in the Asian region over the next ten years. India and China are expected to be the major beneficiaries of this explosive growth potential.
However, low backward linkages to a large raw material base and a lack of pragmatic policies have affected the growth of the paper industry in India.
The Government plays a crucial role in the paper industry as a regulator, supplier and buyer. A balanced fiscal, economic and physical infrastructure is what is imperative to sustain the competitiveness, potential, capability of paper and other manufacturing industries.
(The author is vice-chairman of Ballarpur Industries)
