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ECONOMY
While the industrial sector is growing at a quick pace and the consumption demand is also encouraging, our main concern in the near-term relates to managing inflation. We saw a good agricultural season last year. This did help in bringing inflation a little under control. However, the recent government data shows that once again there has been a spike in certain agricultural commodities, and this could push up overall inflation. Tackling food inflation is, therefore, the key for maintaining macro-economic stability. In the year gone by, the RBI resorted to continuous tightening of monetary policy to rein in inflation. FICCI did not agree with this policy prescription, as we feel that tackling inflation in primary articles can only be achieved through supply-side intervention.
Increase in horticulture and poultry production is also important from another perspective that is the nutrition level of our population. Some surveys by the NSSO have shown that over time the proportion of population reporting being ‘adequately fed’ has gone up significantly. Yet, the nutrition levels and associated indicators of infant mortality and maternal mortality have not shown commensurate improvement. This clearly means that for improving the health of Indians, we will have to increase the production of and improve access to horticulture, poultry and milk products. FICCI will, therefore, like to see in 2011 the launch of a second ‘green revolution’ and a second ‘operation flood’. The manufacturing sector is performing reasonably well, yet its contribution to the GDP is much below potential. Today, this sector accounts for only 16 per cent of the GDP. Our national goal is to take this up to 25 per cent by 2022. To achieve this, FICCI will want the government to come out, as early as possible in 2011, with the much-awaited National Manufacturing Policy. Rationalisation of business laws, setting up of dedicated manufacturing and investment zones, a defined and clear exit policy, greater use of green technologies and defined programmes for skill development are the key pillars for strengthening our manufacturing sector. The proposed National Manufacturing Policy will focus on each of these and hence the government should introduce it at the earliest. Finally, in the financial sector, we expect the government to take up some of the more urgent issues and reform measures. These include upward revision of the FDI cap in the insurance sector from 26 per cent to 49 per cent, deepening of the corporate bond market, introduction of greater competition in the banking sector through issuing of new bank licences and furthering the development objective of financial inclusion in the country. If these suggestions are acted upon early in the year, we will be able to not only sustain the present growth momentum but also improve it and set ourselves for breaking the double-digit growth barrier.
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the
Therefore, our first
expectation from the government is for it to draw a broad-based plan
to boost production in the agriculture sector in the medium term.
However, the improvement in agricultural performance should not be
seen as co-terminus with an increase in foodgrain production alone. We
need the productivity revolution to extend to the horticulture and
poultry segments as well because recent trends show that fruits,
vegetables, meat, fish, eggs, etc, are seeing much higher increase in
prices as compared to foodgrains.