Dear Mem ber,
The appraisal of the 12th Five Year Plan (2012-2017)by Niti Aayog revealed that high focus on capital intensive and high skilled sectors in India has led to fast growth only in segments such as automobile & its ancillaries, machinery, petroleum refining, telecom, software etc. which do not employ low-skilled workers; as a result of this, vast majority of workers remain concentrated in agriculture & unorganised sector. Slow manufacturing growth holds back job creation and it has been a key challenge for the Indian economy, as the sector's growth rate has remained constant for the past 25 years, whereas countries like China and Taiwan recorded more than double the rate of expansion in India.
However, the government's recent focus on investment under the 'Make in India' program, implementation of GST, development of industrial and freight corridors and higher spending on infrastructure could provide fillip to the manufacturing sector going forward.
As per the recent report, India will need investments to the tune of around USD 4.5 trillion till 2040 to develop infrastructure to improve economic growth and community wellbeing. Logistics would play an important role in achieving the targeted economic growth. Acknowledging the importance of the same, ASSOCHAM had organised two major events: 'India - On the cusp of logistic revolution' & 'Railtech- New technology in Indian Railways' during July, 2017, gathering all the stake holders and policy makers under one roof to discuss & deliberate future course of action to make India a competitive global logistic hub.
But, there is a concern over the asset quality of banks and credit growth. It is expected to remain stable around the current pace. Credit growth will largely be driven by retail segment, where we expect system-wide growth of about 15%. Credit demand from corp orates will remain weak due to their financial challenges as well as low rates of capacity utilization across industries. Also, banks will be conscious in expanding their corporate loan book to focus on better-rated companies.
India's infrastructure sector growth slowed to a 19 month low in June, 2017, strengthening the case for an interest rate cut to support the economy as inflation fell to record lows. Reduced output of cement, electricity and coal slowed the pace of expansion of the country's eight infrastructure sector in June, 2017 to 0.4%. The decision of RBI's Monetary Policy Committee to cut the key interest rate by 25bps is a welcome step.
New registrations under the Goods & Services Tax (GST) crossed the ten lakh mark by end of July, 2017, a milestone that brings cheer to policymakers who have been hoping for an increase in the tax base after the rollout of the new tax measure. The collection of Integrated Goods and Services Tax from imports crossed Rs 20,000 crore in July - the first month of the roll out of the new indirect tax regime, pointing towards a major jump in revenues by almost 60%.
As far as agricultural output is concerned, it is a positive sign that overall kharif harvest could be more or less normal. Marginal distortions will always be there, not just due to floods but also the withdrawal of monsoon which invariably could be leaving later and damaging crops. But core growth in agricultural output should not be affected because of the crops impacted in flood-affected regions like Gujarat and Rajasthan.
ASSOCHAM has initiated sharing views on doubling the farmers' income and recently organised an event on the subject.