Measures to revive manufacturing are urgently needed
India is lucky to have two able technocrats at the helm of its economic affairs: Prime Minister Manmohan Singh is an Oxford alumnus while Finance Minister P.Chidambaram is a graduate from Harvard. Yet despite their helmsmanship, the economic horizons of the country have remained cloudy for some time now. That is in sharp contrast to the economic recovery being staged in the United States and China's steadfast growth, even though it has moderated of late. India's economic signals, on the other hand, have reasons to raise eyebrows: the latest figures from the Central Statistics Office (CSO) reveal that industrial growth has “slowed to a 20-year-low of 1 per cent in 2012-13” compared to 2.9 per cent in 2011-12. Clearly, the country is paying a heavy price for its overdependence on the service sector and showing neglect to the infrastructure and manufacturing sectors.
India’s premier rating agency Crisil says that the current situation is reminiscent of the crisis year of 1991-92 when industrial output grew by a mere 0.6 per cent whereas manufacturing output contracted by 0.8 per cent. In addition, high input costs of raw materials and the crimping shortage of power supply seem to have further aggravated the problem. But what stands out starkly and clearly is that the government's apathy towards the infrastructure and manufacturing sectors is the reason for this gloomy scenario. Thankfully, the government seems to have now shaken off its stupor and woken to the reality that the service sector alone cannot be counted on to generate growth and employment.
FICCI President Naina Lal Kidwai said recently that "supply-side bottlenecks due to inadequate infrastructure, inadequacy of fuel supply linkages and delays in project clearances of large manufacturing and infrastructure projects should be the priority areas to be addressed through policy.” The government would do well to pay heed to such advice.
India is lucky to have two able technocrats at the helm of its economic affairs: Prime Minister Manmohan Singh is an Oxford alumnus while Finance Minister P.Chidambaram is a graduate from Harvard. Yet despite their helmsmanship, the economic horizons of the country have remained cloudy for some time now. That is in sharp contrast to the economic recovery being staged in the United States and China's steadfast growth, even though it has moderated of late. India's economic signals, on the other hand, have reasons to raise eyebrows: the latest figures from the Central Statistics Office (CSO) reveal that industrial growth has “slowed to a 20-year-low of 1 per cent in 2012-13” compared to 2.9 per cent in 2011-12. Clearly, the country is paying a heavy price for its overdependence on the service sector and showing neglect to the infrastructure and manufacturing sectors.
India’s premier rating agency Crisil says that the current situation is reminiscent of the crisis year of 1991-92 when industrial output grew by a mere 0.6 per cent whereas manufacturing output contracted by 0.8 per cent. In addition, high input costs of raw materials and the crimping shortage of power supply seem to have further aggravated the problem. But what stands out starkly and clearly is that the government's apathy towards the infrastructure and manufacturing sectors is the reason for this gloomy scenario. Thankfully, the government seems to have now shaken off its stupor and woken to the reality that the service sector alone cannot be counted on to generate growth and employment.
FICCI President Naina Lal Kidwai said recently that "supply-side bottlenecks due to inadequate infrastructure, inadequacy of fuel supply linkages and delays in project clearances of large manufacturing and infrastructure projects should be the priority areas to be addressed through policy.” The government would do well to pay heed to such advice.
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