New Delhi, July 7: The government is shooting for industrial growth of over 10 per cent ó but itís a level that can be achieved if five major impediments are removed.
The Economic Survey has proposed removal of reservation for the small-scale sector and reduction in customs tariffs. In addition, the existing rigidities in labour laws, friction faced in creation and closure of firms, and distortions in the structure of indirect taxes need to be resolved quickly.
The survey also voiced its concern over the drop in flow of foreign direct investment.
The United Progressive Alliance government has reiterated its commitment to continue the reforms and privatisation in the Economic Survey presented in the Lok Sabha. It has stressed that the navratna companies like National Thermal Power Corporation will be retained and encouraged to raise resources from the capital market.
The private industry will be inducted in public sector companies that have the potential for revival. While every effort would be made to modernise and restructure sick public sector companies and revive sick industry, chronically loss-making companies will either be sold off or closed, after all workers have got their legitimate dues and compensation, says the survey.
The foreign direct investment inflows fell to $3.57 billion that once peaked at $4.74 billion in 2000-01 and declined to $3.73 billion in 2002-03. Maharashtra led amongst the states that have attracted maximum FDI at 17.48 per cent followed by Delhi at 12.06 per cent, Tamil Nadu at 8.58 per cent, Karnataka 8.26 per cent and Gujarat at 6.44 per cent.
According to the survey, the industrial growth during 2003-04 was healthy with the index of industrial production (IIP) demonstrating a growth of 6.9 per cent. The manufacturing sector showed a major growth of 7.2 per cent, while mining and electricity sector grew by 5.1 and 5.0 per cent respectively.
The lower interest rate, the availability of retail finance and the strong monsoon helped the consumer-durable sector to post a growth of 11.6 per cent during 2003-04 as against the decline of 6.3 per cent during the same period previous year.
However, the consumer non-durable sector performed badly primarily due to the competition from local brands and inadequate coverage of the IIP. The consumer non-durable sector could post a growth of 5.7 per cent during 2003-04 as against 12 per cent during 2002-03.
The investment intention by local entrepreneurs in licensable and delicenced sector has increased from Rs 57,806 crore during January-April 2004 as against Rs 15,931 crore during the same period in 2003.
Many industries contributed to the overall growth of industry. The automobile sector increased its exports by 56 per cent and the components grew by 30.1 per cent. The revenue from export of automobile components grew from Rs 3,496 crore in 2002-03 to Rs 4,550 crore in 2003-04.
Gems and jewellery exports grew by 19.1 per cent in 2003-04. Textiles sector also improved its exports. In April-February 2003-04, textile exports were valued at $10.1 billion against $9.6 billion during the same period last year