Dear Mem ber,

Assocham Bulletin - - NEWS -

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.

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