India to register over 8 per cent GDP growth

New Delhi, February 26:

The Indian economy will clock a higher gross domestic product (GDP) growth at over eight percent for the 2005-06 fiscal, thanks mainly to a good monsoon and striking growth in manufacturing and services sector, an industry body has said. The Confederation of Indian Industry (CII)’s forecast today of over eight per cent GDP growth is in line with the quick estimates released by the Central Statistical Organisation (CSO).

“A higher growth in GDP this year is expected mainly due to a good monsoon, impressive growth of manufacturing and services sectors and a higher share of services sector in the GDP (from 53 per cent last fiscal to 54 per cent in the current year),” the CII stated. In its latest State of the Economy (SOE) report, CII has reported 7.8 per cent growth rate in industrial production during April-December 2005, while stressing the need for propelling growth in mining and electricity. While the capital goods sector has sustained its high growth momentum recording 15.7 per cent growth during the first three quarters of 2005-06, consumer goods production has also recorded a healthy growth.

Focusing on the challenges being faced by the Indian textiles industry in its sector watch, the report underlines the need for several policy measures to help the country double its share in global textiles trade from the current four per cent to eight per cent by 2010 — as envisaged by the national textile policy (2000).

The measures suggested by CII includes introducing flexibility in labour laws, encouraging large-scale production, reducing delays in shipment of finished goods and greater availability of credit at lower rates of interest among others.

On the revenue front, the report notes that in the April-December period of 2005, indirect tax revenue was slightly more than expected whereas the same from direct tax has been less than expected.

Revenue and fiscal deficits during this period are higher than the corresponding figures of the last year and are likely to exceed the budget targets, CII has noted. The growth in exports as well as imports registered a decline during the first three quarters of the current fiscal. A major challenge lies in increasing the growth of exports. Bringing down the growth of imports may not be advisable at the moment, keeping in view the capital-intensive nature of imports and high oil prices, CII said.

‘Populism over reforms’

NEW DELHI: India’s Congress-led government will accent populism rather than bold reform in its budget for Asia’s third-largest economy next Tuesday as it seeks to deliver on pledges to the poor. At the same time, the government will also strive to steer the fast-expanding economy to even greater growth. With the government relying on Marxist allies for its parliamentary survival, FM Chidam-baram needs to target the rural masses who vaulted Congress to its win in 2004. And with economy seen growing by a better-than-expected this year he will have more elbow room for social spending in his budget for the fiscal year to March 2007. — AFP