The Economic Survey of India 2006-07 (the fiscal year ending March 31) carried out by the government has lauded the remarkable growth of the industrial sector, propelled by robust growth in manufacturing, which continued unabated during the current year so far. Year-on-year industrial growth of 10.6 percent in the first nine months of 2006-07 was the highest recorded in the near past.
Production at factories, utilities and mines increased 10.9 percent from a year earlier, following December’s revised 12.5 percent gain, says the Central Statistical Organization. Analysts expected a rise of 10.1 percent. Commerce and industry minister Kamal Nath said “the government is expecting this rate of growth will be further enhanced in the last quarter of the year, so that during the entire financial year, (2006-07) the growth rate of industry can touch 11 percent and the manufacturing rate of growth go beyond 12 percent.”
Target in sight
Given the recent performance, the Eleventh Plan (2007-2012) target of 10 percent annual industrial growth appears to be in sight. The Economic Survey pointed out that the target is “eminently achievable,” owing to growth in automobile production and electricity generation increase.
A notable feature of the current growth phase is the sharp rise in the rate of investment in the economy. Investment, in general being a forward-looking variable, reflects a high degree of business optimism. “The investment scenario looks quite optimistic, particularly with rising domestic savings rates and foreign direct investment flows,” says the Survey.
While the demand for durable goods is rising with economic expansion and easier availability of credit, the country’s industrial growth has been rising on the back of higher manufacturing of cars, washing machines and motorcycles. “The production data suggests consumer demand continues to be strong,” said N. R. Bhanumurthy, an economist at the
With the emergence of a vast domestic market and relatively low-cost workers with advanced technical skills,
More and more multinationals are setting up manufacturing operations in
The new report, titled “What’s Next for India: Beyond the Back Office,” by The Boston Consulting Group and Knowledge@Wharton, says that India has been behind in the manufacturing sector mainly due to poor infrastructure, bureaucratic red tape and restrictive labor laws.
Uday Lal Pai, email@example.com, is a freelance journalist based in