Thursday, February 25, 2010

Industrial growth revives to 7.7% during April-November 2009-10

FDI INFLOW TO INDIA REMAINS ROBUST
  

ECONOMIC SURVEY 2009-10







The recovery in the industrial sector is clearly discernible as corroborated by both the data on national accounts and the index of industrial production (IIP). The downward trend observed in the rate of growth of the IIP that spanned almost eight quarters (beginning the first quarter of 2007-08 and continuing through to the last quarter of 2008-09) stands reversed as gleaned from the latest data for the current fiscal. After reaching a trough of 0.6% during the second half of 2008-09, growth in the IIP revived to a level of 7.7% during April-November 2009-10.



The broad-based nature of the recovery was evident in the pick-up in growth of almost all major components of the IIP. The major industrial groups like automobiles, rubber and plastic products, wool and silk textiles, wood products, chemicals and miscellaneous manufacturing staged a strong recovery during April-November 2009, while machinery and textile products reinforced their growth. Led by cement, non-metallic mineral products also staged a modest recovery. Product groups like paper, leather, food and jute textiles did not evince any visible recovery. Cotton textiles and metal products have also been experiencing lacklustre growth since 2007-08. Overall the picture is a mixed one in the analysis of major industrial group.



The strong growth in the machinery and equipment group fed into the growth in capital goods, while some automobile components like commercial vehicles exhibited slack in growth. Growth in consumer durables has been broad-based, the robust production performance of automobiles being quite significant. On the other hand, the low growth in food products, beverages and tobacco products and cloth and footwear acted as a dampener on the growth in consumer non-durables.



The textile group consisting of cotton, wool, silk and man-made and jute textiles and textile products, grew by 7.5% during April-November 2009compared to 1.0% during April-November 2008. Overall, the production of textile fabrics increased by 10.7% during April-November 2009-10. The highest growth was observed in the hosiery sector (12.8%) followed by power looms (12.5%). The technology upgradation fund scheme (TUFS) and scheme for integrated textile parks (SITP) are two flagship schemes of the Ministry of Textiles. Under TUFS, Rs. 78,307 crore was sanctioned against the project cost of Rs. 1,79,856 crores and loans worth Rs. 66,284 crore were disbursed to 25,777 applicants upto June 2009. Under the SITP, 40 integrated textiles parks of International standards, covering the weaving, knitting, processing and garmenting sectors with project proposals worth Rs. 4,141.39 crore (of which assistance from the Government is Rs. 1,422.43 crore), have been sanctioned.



Wood and wood products showed 10.5% growth in production during April-November 2009, compared to 6% decline during the same period in the previous year. Paper and paper products grew by 2.1% while paper and paper board and corrugated boxes/cartons achieved reasonable growth during the current year, bleached newsprint and rayon-grade pulp declined by more than 10%. The leather products which include finished leather, leather footwear, shoe uppers, leather garments and other leather goods, showed only 0.9 % growth in production during April-November 2009, following a 5% decline during the same period in the previous year. Finished leather declined by 13% causing much of the slow down in the sector during April-November 2009. While footwear items showed a mixed picture, leather garments grew by 5.7% during the period.



The Indian pharmaceutical industry has grown from Rs. 1500 crore in 1980 to approximately Rs. 1,00,611 crore in 2009-10 (September 2009). The country now ranks 3rd in terms of volume of production (10% of global share) and 14th by value. The Indian pharma industry growth has been fuelled by exports which registered a growth of 25% in 2008-09. Registering the impact of the global meltdown, the production of petro-chemicals declined by 5.5% in 2008-09 but recorded a positive growth of 0.76% during April-December 2009. Rubber and plastic products grew by 25% during April-November 2009. The non-metallic mineral products grew by 6.4% during April-November 2009 as against negligible growth during the corresponding period in the previous year.



India ranked as the 5th largest producer of crude steel in the world during January-November 2009. The Indian Steel Industry appears to have successfully overcome the effects of the global economic slowdown during 2009-10. India and China are the only countries to have registered a positive growth during January-November 2009. The strong growth in the GDP in the 2nd quarter of the current fiscal and in the IIP during April-November 2009 suggests that the demand side of the steel industry is back on stable footing. Indian steel outlook for 2010 continues to be positive, since Indian steel consumption is expected to be rising at 6-9% during the current year.



The global financial crisis affected growth in tourism in 2008-2009. Government made concerted efforts including a series of promotional initiatives to counter the impact of the slowdown. Initiatives have been taken to develop world class tourism infrastructure through central financial assistance to states/UTs for identified circuits and destinations These includes mega projects, human resource development, augmenting accommodation infrastructure, positioning Indian tourism products and promoting India as a round the year tourism destination.



The growth in credit to industry declined steeply from 37% in November 2008 to 14.2% in November 2009. Industrial credit to micro and small enterprises grew at the higher rate (19.3%) in November 2009 compared to the credit growth in the overall industrial sector. Further, industrial credit to micro and small enterprises in the manufacturing sector also grew at 19.0%. The corresponding figures during November 2008 stood at 20% and 21.5% respectively.



FDI inflow to India, which remained robust in 2008-09 despite the slump in global financial growth have also continued to flow smoothly during the current year so far. During April-November 2009-10, total FDI inflows stood at Rs. 93,354 crore (US$ 19,379 million) as against Rs. 85,700 crore( US$ 19,791 million) during the corresponding period 2008-09, signifying a growth of 9% in rupee terms and a decline of 2% in US dollar terms; the divergent patterns in growth rates being attributable to exchange rate changes during the period. Sectors like agricultural services, sea transport and electrical equipments have shown a quantum jump in FDI flows during 2009-10.



In pursuit of excellence in pharmaceutical education and research, 6 new National Institute of Pharmaceutical Education & Research (NIPERs) have been set up, in addition to the existing one at Mohali. Possibilities of setting up of joint venture of ammonia/ urea projects in countries abroad where adequate gas is available. are being explored.



Under the credit linked capital subsidy scheme (CLCSS), which aims at facilitating technology upgradation of the MSE sector, 1403 MSEs have been assisted and subsidy amounting to Rs. 81.3 crore have been sanctioned during April-November 2009. A loan agreement for $ 150 million was signed between the Government of India and the Asian Development Bank in December 2009 for implementing the comprehensive Khadi reform programme, under which the Khadi and Village Industry(KVI) Sector is proposed to be revitalised with enhanced sustainability income, employment and artisan welfare.

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