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In keeping with growth momentum maintained by the economy as a whole, the Economic Survey estimates the industrial growth in the year as a whole to be 7.8% in 2004-05. At this level the growth rate is higher than in previous years when it was 6.6% in 2003-04 and 2002-03 as per the estimates put together by Central Statistical Organisation. In fact the growth rate during 2004-05 would be the highest when compared with annual industrial growth since 1997-98 (4.3%). The manufacturing sector is estimated to record a growth of 8.9%, electricity, gas & water supplier 6.3%, construction 5.7% and mining & quarrying 5.3% during the current year.
The actual numbers show that industrial growth reached its highest level since 1995-96 at 8.4% during the first three quarters of the current year. The positive development industrial front was most pronounced in manufacturing which reached double-digit levels in September and October. Overall manufacturing recorded robust growth of 9% during first three quarters. Capital goods production grew at an impressive rate of 13.3% against 10.1% in the same period of previous years indicating a possible step-up in investment activity. Consumer goods increased by 11.2% of which consumer durables at 15.3% had particularly pronounced growth. The Economic Survey observes that the “low interest rates” may have partly fueled this growth of consumer goods.
Amongst the industries, automobile production had a high growth rate of 16% in April December 2004 against 15.1% in the previous year. The textile production witnessed signs of resurgence in the current year with production of fabrics increasing by 4.8% in April-November 2004 and the textile products (including wearing apparel) registered the growth rate of 10.6% in April-November with a robust growth of 26% in the last 2 months. Gems and Jewellery exports registered a buoyant growth of 34.2% in first six months against 16.8% growth in the entire 2003-04 crossing a level of US$ 10.5 billion.
While noting that India has globally built up valuable brand equity in the Information Technology (IT), the survey observes that the country has emerged as a most preferred destination for Business Process Outsourcing (BPO) in IT-Enabled Services (ITES), a key driver of growth for software industry and the services sector. The ITES-BPO industry is estimated to have grown by 54% with export earnings of US$ 3.6 billion in 2003-04. The production of Indian electronics and IT industries was worth Rs.1,14,650 crore during the year showing an increase of 18.2%. The vision for IT policy is to use IT as a tool for raising living standards of common man. The production of basic major chemicals is expected to grow by 4.8% in 2004-05 to reach 7,403 thousand tones against 7,062 thousand tones in 2003-04. The production of major petrochemicals is expected to grow by 5% to reach of level of 7,355 thousand tones from 7,006 thousand tones in 2003-04. Cement production on the other hand increased by 6.81% during April-December 2004 reaching 962.95 lakh tonne.
In the Oil & Gas Sector, production of petroleum products increased by 6.4% to reach 91.3 million tones. Survey notes that the lack of well functioning market determined prices system, partly because of vibrant competition, continues to constrain the industries performance. It enumerates several steps being taken to enhance domestic oil & gas production including the efforts under New Exploration Licencising Policy (NELP) and the initiatives for securing oil & gas supplies through acquiring properties abroad and sourcing gas through trans national pipelines & by importing gas in liquid form. A programme for enhanced/improved oil recovery from existing fields being implemented in 15 large ONGC fields which is expected to increase recovery by 4 to 5%. The incremental production is to be 120 million tones upto 2030.
In respect of Tourism, the world’s largest export industry, foreign exchange earnings during 2003-04 increased by 30.2% to US$ 3,945 millions from US$ 3,029 millions in 2002-03. The number of tourist arrival increased by 17.3% to 28.7 lakh foreign tourist from 24.54 lakh during the period. Apart from its direct contribution to economy, tourism had significant linkages with several other sectors like agriculture, poultry, handicrafts and construction. World over 694 million tourist traveled internationally in 2003 and spent about US$ 514 billion. Tourism contributes 13% of world export and 8.2% global employment.
Small scale industries (SSI) sector, occupying a prominent place in the economy, has registered a continuous growth in the number of units (4%) production (11.5%) and employment generation (4.2%) during 2004-05. Number of Units is estimated to increase to 118.53 lakhs from 113.95 lakhs in previous year. The production is expected to be worth Rs. 3.99,020 crore up from Rs.3,57,733 crore and employment in the sector would be of the order of 282.82 lakh against 271.36 lakh in previous year. The survey outlines steps taken to overcome problems faced by sector. These include setting up of National Commission on Enterprises in the unorganized/informal sector in September 2004, enhancement in investment limit, enhanced composite loan limit etc. It informs that a new Promotional Package for small enterprises is being formulated to include measures like adequate credit, incentives for technology upgradation, infrastructural and marketing facilities etc.
Survey notes that outlook for industrial sector will further brighten if infrastructure bottlenecks and shortages, labour market rigidities, entry & exit barriers and land acquisition and multiple stages/levels of approvals-clearances are removed. It calls for improved Centre-State interface for better coordination. It says that strength and robustness of industrial growth during the year are particularly striking in the light of shocks like Tsunami, a deficient monsoon and a third oil shock which saw international oil prices touching a record of US$ 56 per barrel in October. The increasing efficiency and competitiveness of domestic producers, liberalized trade and deregulated interest rate regime are critical contributors to growth acceleration and stability. Present trend indicates a positive outlook for industrial growth.
RCJ/KC (Industry-1- ES 04-05)
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