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Economic slowdown to continue for another year: CII

The current gloom in the economy will continue for another year, according to the Confederation of Indian Industry, the largest representative body of Indian industry.

"The turnaround in the economy will come only after a year", Tarun Das, the director general of CII said in Calcutta on Tuesday while commenting on the overall economic scenario.

He explained that it was actually the slowdown of the US economy coupled with very little investment in the vital infrastructure sector, which had affected the Indian economy.

"I think the recovery of the US economy is still one year away", Das said, adding, "it (US) is such a large economy with so much of purchasing power that it has a market for everybody and that is why it has impact on every economy".

Another important reason for the slowdown of the Indian economy, according to Das was the lack of investment in the infrastructure sector.

"The finance minister gave us an outstanding Budget but the allocation of funds for different ministries for infrastructure projects has not been utilised. There is no new infrastructure project coming up", the CII DG said.

He emphasised that the only way to stimulate the economy was through new projects in railways, roads, airports and ports, which would in turn push growth.

Das, however, said with the help of another good monsoon the agriculture sector was likely to perform better with a 2-3 per cent growth, which in turn would push the overall growth in the current year to above 5 per cent.

The CII DG also expressed unhappiness in announcing major infrastructure project despite the policy announcement.

"They announced the policy for 100 per cent private participation for development of airport, but till date no project was announced", he said.

Though some contracts had been announced for major roads project, he said, its impact would be seen only during 2002-03.

He stressed that major infrastructure projects would only push the demand, which then would create a situation for overall industrial recovery.

"The industry will not spend without any demand since there is already over-capacity in the manufacturing sector", Das said.

This was the reason that the banks were flush with funds but there was no taker.

"We are banking on the government for spending on the infrastructure projects which would enable the economy to pick up", The CII DG said.

Commenting on the UTI crisis, Das said it had a negative impact on the already beleaguered economy. He added that it also had a silver lining because "now the financial sector reform will be expedited".

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