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|February 23, 2001||Feedback|
'Industrial growth tardy, investment dips'
Industrial growth, including the growth of six core industries, slowed down and the volume of investment declined during the current financial year, according to the Economic Survey 2000-01 presented to the Indian Parliament on Friday.
Industrial growth, measured by the Index of Industrial Production (IIP), slowed down again during the year, up to December, with the overall growth registering 5.7 per cent compared to 6.4 per cent during the corresponding period of the previous year.
The 5.7 growth rate was contributed by 5.9 per cent in manufacturing, 4.8 per cent in electricity and 4.1 per cent in mining compared to 6.4 per cent during the corresponding period of the previous year, which was contributed by seven per cent, 7.7 per cent and 0.5 per cent by these sectors respectively.
According to the Survey, the factors responsible for the slow down of industrial growth during the current financial year include lack of domestic demand for intermediate goods, low inventory demand for capital goods, high oil prices, existence of excess capacity in some sectors, business cycle, inherent adjustment lags in industrial restructuring, infrastructure constraints in particularly power, roads and transport, and a high interest rate environment due to continued high fiscal deficit.
Six core industries-electricity, crude Oil, refinery, coal, steel and cement-having a weight of 26.7 per cent in the overall IIP, grew at 7.7 per cent during the period compared to 9.1 per cent during the corresponding period in the previous year.
The petro-refinery has improved its performance to 25.9 per cent, compared to 22 per cent during the corresponding period. Steel production decreased to 12.8 per cent compared to 15 per cent. Crude petroleum recorded a positive growth of one per cent compared to a decline of 0.4 per cent, whereas as cement and electricity showed lower growth rates of 2.3 and 4.7 per cent respectively compared to 16 per cent and 7.5 per cent during the corresponding period of the previous year.
Coal production has shown some improvement with its growth rate increasing to 5.9 per cent during the current year compared to 0.6 per cent of the previous year.
A total of 2789 Industrial Entrepreneurs Memoranda (IEMs) and 192 Letters of Intents (LOIs) were filed during January-November, 2000 with proposed investment intentions of Rs 698.14 billion and Rs 9.61 billion respectively.
Despite increase in the number of IEMs, the volume of investment committed therein was lower than the previous year.