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Signs of resurgence

The review sees signals of a marked upturn in economic activity in some critical sectors

Housing 38% of non-food credit

The credit to the housing sector constituted a significant 38 per cent of non-food credit owing to a decline in housing finance interest rates and simplification of procedures. This led to a revival of the housing sector this year.

According to the report, the National Agenda on Governance has "Housing for All" as an important element with a target of constructing an additional 2 million houses. This is expected to give a fillip to the housing sector.

Of the targeted 2 million houses, 1.3 million will be constructed in the rural areas and the remaining in the urban areas, with an emphasis on meeting the requirements of weaker sections.

Under the Indira Awaas Yojana, during 2001-02, of the targeted 1.294 million houses, only 1.171 million houses were constructed. While in 2002-03, against the targeted 1.340 million houses, 447,000 were already constructed by November 1, the report said.

Apart from the Housing and Urban Development Corporation and the National Housing Bank, housing finance institutions and cooperatives are the primary institutions for promoting house construction in the urban areas.

Core sector grows 5.6%

Signals of a marked upturn in economic activity are evident from the impressive growth achieved by the six core industries. According to the report, the six core industries witnessed a 5.6 per cent growth during the April-October period this year as compared to 2 per cent in the corresponding period last year.

Of the six industries - power generation, coal, steel, crude, refinery throughput and cement - the last showed a commendable growth of 9.3 per cent. Steel, on the other hand, recorded a 7.3 per cent growth.

The growth in the sector is attributed to the demand from housing and road construction activities. A decline in interest rates for housing finance and simplification of procedures led to a revival of the housing sector.

Apart from the housing sector, ports and railways have done better in the first six months of the financial year as compared to the corresponding period last year.

In addition, the road connectivity to 10 major ports -Chennai, Cochin, Ennore, Haldia, Jawaharlal Nehru Port Trust, Kandla, New Mangalore, Paradip, Tuticorin and Vishakapatnam - witnessed considerable improvement this year. The coastal shipment of coal too exceeded its target.

Roads on fast track

Momentum in road construction has picked up due to the progress of the National Highway Development Project. The project generates daily employment for 250,000 construction workers and 10,000 supervisors.

The project, launched by the Prime Minister in 1998, witnessed good progress this year on both the Golden Quadrilateral and the North-South and East-West corridors, the report said. In addition, the development of rural roads under the Pradhan Mantri Gramin Sadak Yojana also showed considerable improvement, the report added.

Two stretches of National Highways, 224 km and 266 km, were widened to be able to accommodate four and two lanes, respectively, during the first five months of the current year.

In addition, four bypasses were constructed and 39 bridges constructed or repaired during the same period. Riding quality was improved on 1,056 km, the report said. It further added that the work on roads was likely to witness acceleration in the coming months.

Work on 5,846 km will be nearly complete by December 2003 under the Golden Quadrilateral (Delhi-Kolkata-Chennai-Mumbai). And a 7,300-km corridor is expected to be completed by December 2007 for the North-South (Srinagar to Kanyakumari) and East-West (Silchar to Porbandar) stretches.

Steel turns the corner

The high-value additive and employment-intensive steel sector appears poised for a turnaround after subdued performance in the past few years.

As per the report, the upward movement of the steel prices in the domestic and international markets since December 2001, along with a growth in the automobile and construction sectors, has provided a fillip to the steel sector.

The mid-year economic report said the industry appeared to have revived by the end of the second quarter of the current financial year, buoyed by an upswing in the consumption of finished steel. The production of finished steel has been recorded at 18.10 million tonnes during the April-October period, an increase of 5.3 per cent as against the corresponding period in 2001-02.

The consumption of finished steel has also gone up by 6.6 per cent during the April-October period as compared to the corresponding period in 2001-02. Similarly, the production of pig iron estimated at 2.19 million tonnes during above mentioned period has seen a significant increase of 34.1 per cent compared to the last financial year.

The exports of iron and steel have increased 8.7 per cent during this period in spite constraints due to a relatively slow revival of demand, competition from cheap imports and prohibitive barriers in the form petitions for anti-dumping and countervailing duties moved by the European Union, the US and Canada

Textiles forge ahead

The textiles industry has shown signs of recovery during the April-October period of the current financial year. The output of the textiles products (including wearing apparel) recorded an overall upward trend of 17 per cent (year-on-year) in the first half of the financial year, significantly higher than the increase of 5.2 per cent in overall industrial production.

Jute and other vegetable fibre textiles (except cotton) grew 6 per cent in the April-September period. However, wool, silk and man-made fibre textiles grew by a modest 3.7 per cent while cotton textiles declined 2.5 per cent.

Meanwhile, textiles exports in April-July 2002 showed an increase of 6.7 per cent, compared to the corresponding period in 2001-2002. With a boost to exports, the industry may be able to achieve the overall export target of $15 billion for the current year.

More than 6,000 shuttleless looms have been installed in the first half of the current year, emphasising the upbeat sentiments of domestic investors.

The resurgence of the industry is largely due to the "textile package" announced in the Union Budget 2002-03, which included a concessional 5 per cent Customs duty regime for 159 critical textiles machinery items and granting of permission to import of 16 per cent textiles machinery items at the rate of 10 per cent.

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