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External debt
jumps to $112 b Oil import bill
swells to $20 b Interest rates
may go up: Survey Indian economy
debt-chained: IMF Survey presses
for power reforms |
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Auto industry
lauded MUL diesel engine
plant for Gurgaon Red tape hits
industrialists Survey hits out
at low tele-density
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Economic Survey offers mixed flavour New Delhi, July 7 The inflation rate for the manufacturing sector, which remained above 5 per cent for most of the period in 2003-04, averaging 5.7 per cent for the year, has shown signs of softening beginning with the fiscal 2004-05. The rising inflation rates in sub-groups, food products (edible oil and sugar), basic metals (iron and steel), textiles and cement, have been arrested during 2004-05. “The year 2004-05 is, therefore, likely to witness a relatively lower inflation rate in the manufacturing group as compared to the annual average of 5.7 per cent”, it said. Domestic deregulation and tariff rationalisation have resulted in greater competition, greater cost-efficiency and moderation of upward pressure on prices, it said. “Barring the uncertainties of movement of the international prices of petro products, there is reason to believe the inflation rate during 2004-05 will remain around 5 per cent as projected by the RBI,” the Survey said. The rise in prices of manufactured products goods during the first two months of 2004 was largely due to hike in prices of steel and sugar, it said. |
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Rues bottlenecks in industrial growth New Delhi, July 7 "One of the most important challenges in Indian economic policy consists of devising strategies for obtaining industrial growth in excess of 10 per cent," the Survey presented in Parliament said. Annual industrial growth has been in disappointing single digits since 1995-96. Among the factors identified by the survey that hinder industrial growth are reservation in the small-scale sector, high customs tariffs, rigidities in labour laws, friction faced in creation and closure of firms, distortions in the indirect tax regime. Some sub-sectors of industry such as automobiles, have demonstrated inherent strengths of Indian labour and capital. "In a diverse range of industrial activities, several Indian firms have succeeded in getting integrated into global production chains and realised rapid growth", it said. This experience suggests that with appropriate scale, investment and technology, rapid industrial growth is indeed possible. The termination of the Agreement on Textiles and Clothing (ATC) on January 1, 2005 holds great potential for contributing to rapid growth of the textile industry, the largest industry in terms of employment, the survey said. The Survey said growth for the industrial sector in 2003-04 continued to be healthy. The index for industrial production (IIP) grew by 6.9 per cent. Manufacturing, which has a weight of 80 per cent in IIP grew by 7.1 per cent while mining grew by 5.1 per cent and electricity by five per cent. At a two digit level classification as many as 12 out of the 17 industry groups have showed positive growth during 2003-04. In manufacturing, growth recovery has been sustained in the current year also for a number of sub-sectors. However, the key industries of construction sector - steel and cement - showed a growth of 6.9 per cent and 6.1 per cent respectively in 2003-04. The growth in capital goods sector was healthy with production increasing by 12.7 per cent in 2003-04.
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External debt jumps to $112 b New Delhi, July 7 The Survey also said there were significant downside risks to the growth of India’s external sector. The risks include continuing firmness of global oil prices, volatility among major currencies and the danger of interest rate hikes in developed countries. Efficacy of macro policies in carefully managing the impact of a potential global transition from low interest rate and currency imbalances to a more sustainable regime, therefore, gains relevance, the Survey said. India’s external debt was at $83.801 billion at the end of March, 1991, and maintained an upward trend till 2001 at $101.132 billion. It subsequently came down to $98.757 billion by the end of March, 2002, the Survey said. However, external Debt-GDP ratio improved from 28.7 per cent in 1991 to 20.2 per cent at the end of March 2003. During the same period, short-term debt to total external debt ratio declined from 10.2 per cent to 4.4 per cent, the Survey said, adding that it marginally increased to 5.1 per cent by the end of December 2003.
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Oil import bill swells to $20 b New Delhi, July 7 Crude oil and petroleum product import bill grew to Rs 93,159 crore ( $20.3 billion) in 2003-04 over Rs 85,042 crore ($17.6 billion) in the previous year as refineries resorted to heavy exports of refined petroleum products. India exported 14 million tonnes of petroleum products for Rs 16,101 crore ($3.5 billion) in 2003-04 as compared to 10.28 million tonnes exported the during previous year for Rs 10,868 crore ($2.3 billion).
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Interest rates may go up: Survey New Delhi, July 7 “With the fiscal deficit remaining high and signs of pick up in the flow of credit to the commercial sector, the possibility of the interest rates moving northwards cannot be ruled out,” the survey, tabled in Parliament, said. A major concern with regard to the interest rates was the downward rigidity observed in the lending rates. The lending rates had remained sticky and had not fallen as much as the deposit rates. “As a result interest spread of commercial banks witnessed an increase during 2001-02 and 2002-03. The lending rates declined markedly for large top rate borrowers which have access to funds at sub-PLR rates. However, lending rates have not declined commensurately for other borrowers”, the survey said. It also said the Reserve Bank had continued its soft interest rates policy stance, imparting greater flexibility to the interest rate structure. The RBI had progressively reduced the Bank Rate to 6 per cent and the Repo Rate, the interest charged by banks when they lend to the RBI, to 4.5 per cent.
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| Indian economy debt-chained: IMF
Washington, July 7 India’s economic growth was strong in fiscal 2003-04 and its economic ties with the rest of the world have strengthened, with services exports — largely information technology — also leading the way, the IMF said in its publication “Finance and Development.” The IMF also notes that there is a steady rise in the debt of both the Central and state governments, which, “over the medium term, could constrain growth.” “Current account surpluses and strong capital inflows have heated foreign reserves, reducing external vulnerability. The recovery was strengthened in agriculture, following a severe drought in 2002-03, but services are increasingly driving India’s economy,” it said. Indian exports benefited from competitiveness gains in the past three years despite the recent strengthening of the rupee against the US dollar. Despite fiscal deficits, interest rates have fallen with global integration, and inflation is moderate, it added. At the same time, it points out that while the fiscal situation improved in 2003-04, it “still poses serious challenges and risks, with deficits diverting savings from more productive areas.”
— PTI
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Survey presses for power reforms New Delhi, July 7 Referring to the growing gap between demand and supply of power in the country, the Survey noted that during 1992 to 2004, the generation capacity grew at 4.1 per cent while GDP rate grew by an annual 6.4 per cent. Between 2002-03 and 2003-04, generation capacity of just 6,809 MW was commissioned. Appreciating the recent initiatives of the government, the Survey noted that hydel generation of power showed a sharp turnaround, reflecting good monsoon, from 13.8 per cent decline in 2002-03 to a 15.6 per cent increase in next year. At the same time, thermal and nuclear generation growth slowed from 6.5 per cent in 2002-03 to 3 per cent in 2003-04. Commenting on the fiscal health of state power utilities, the Survey stated, “the rate of return of SEBs in 2003-04 worked out to be minus 31 per cent. The direct transfer of funds from state governments to SEBs amounted to Rs 11,427 crore in addition to uncovered subsidy of Rs 14,846 crore”. However, the Economic Survey hopes that with effective implementation of the Electricity Act, 2003. The power sector would witness emergence of “futures and options on electricity”, which will allow buyers and sellers to make contracts governing future dates.
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Auto industry lauded
New Delhi, July 7 “The liberalisation of norms for foreign investment and import of technology for manufacturing of vehicles, permission of 100 per cent foreign direct investment under automatic route in this sector, have helped it to restructure, absorb new technologies and get integrated into global production chains,” it said. Total vehicle production grew by 15.1 per cent at 72.2 lakh units during 2003-04 over 62.7 lakh units during the previous year with India joining the club of one million car producing countries of the world.
— PTI
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MUL diesel engine plant for Gurgaon
Bangalore, July 7 The company, which currently has insignificant presence in diesel vehicles, will source technology for the proposed plant from Fiat GM Power Train. MUL Managing Director Jagdish Khattar told reporters here that a team from FGP, a joint venture between Fiat, GM and Opel, is already in Gurgaon in this regard and the plant with a capacity to
produce 1 lakh diesel engines would be operational in 2006. He pointed out that while the annual growth in the diesel segment was 13 per cent in the last three years, it was 19-20 per cent in the first quarter (April-June) of the current
fiscal. “We want to play a major role in diesel segment also. That’s our next target. So far, we have been focusing on retaining our market share in petrol segment. We will do so in diesel segment also”, he said.
— PTI
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Red tape hits industrialists Kumarhatti, July 7 The industrialists, completely dejected due to the delay in getting the clearance for units, have landed in a catch- 22 situation. Inquiries show that right from buying a plot to set up a unit to getting clearance from the pollution board, the industrialists have to make rounds of one office or the other, thus losing their focus on the project itself. The industrialists, who preferred Parwanoo to establish industrial units under the package, have already shifted to Uttaranchal after facing problems in clearance, revealed official sources. The Industries Department which is supposed to work as a coordinator between the departments and industrialists is in peculiar position due to its failure to facilitate the clearance of new projects. In fact, the Industries Department often finds itself in an awkward position as it has to put things positively before the industrialists whereas the reality is quite different. The industrialists' woes start immediately after getting registered with the Industries Department. Firstly, they have either to buy a suitable piece of land or the rented accommodation. If an industrialist prefers to buy the land, he has to apply for a sanction under 118 of the HP Land Reforms and Tenancy Act which normally takes three to four months. In Parwanoo alone there are around 20 cases that are waiting clearance under the section for over eight months. However, in the case of rented accommodation it takes months to get the permission for getting industry plot on rent. Even in resale of the industrial plot the normal time is 3 or 4 months. Applying for an electricity connection for unit is another long process as it takes time to comply with the guidelines of electricity department.
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Survey hits out at low tele-density New Delhi, July 7 “A concern for policy is the stagnation of internet use both dial-up and broadband. One problem inhibiting dial-up internet use is the lack of flat fee unlimited access tariff plans for fixed telephony”, it said. While the growth of broadband has been a vexing problem in many countries, some countries like South Korea have
achieved remarkable penetration of broadband internet access at homes, it said.
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Visitors look at Tata
Motor's latest model 'Sumo Victa' during its launch in New
Delhi on Wednesday. — PTI photo Airtel plan VAT opposed Bolero export Hyundai sales Chitkara School |
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The Economic Survey 2004-05 said today external debt has jumped by 6.47 per cent to $112.13 billion till 2003, mainly due to the rise in short-term debts.
Sumo Victa launched