The manufacturing sector is an important tool for the creation of jobs in the country. Hence, growth of this sector is vital not only for the overall growth of the economy, but also to meet the objectives of employment generation. The growth in the manufacturing sector, which was 9.7 per cent in 2009-10 and 7.6 per cent in 2010-11, declined to 2.5 per cent in 2011-12...
The National Manufacturing Policy that was announced a year ago has addressed this opportunity by aiming to increase the growth rate in manufacturing to 12-14 per cent over the medium term. In another decade, the share of manufacturing in the country’s gross domestic product (GDP) is envisaged to rise to 25 per cent. To increase the competitiveness of this sector, a host of remedial measures are necessary. The World Bank annual surveys on ‘doing business’, which rank economies in 10 areas of business regulation, has placed India 132 out of the 185 economies surveyed in 2012. While India ranks favourably in parameters such as getting credit and protecting investors, our country’s rankings in starting business, dealing with construction permits, enforcing contracts and resolving insolvency are not high. While the rankings may not truly reflect the ground realities, these are nonetheless indicative of the need for us to change...
Research and development (R&D) is the basic constituent of promoting innovation. The culture of research needs to be further augmented in our country. Only about 6,000 patent applications were filed by Indians in 2010, which is a mere 0.3 per cent of the total applications filed in the world. India spends only 0.9 per cent of GDP on R&D, whereas China spends about 1.2 per cent, UK 1.7 per cent and Israel 4.3 per cent. We should increase our expenditure in this area to become globally relevant in manufacturing... We do have a large number of engineering and technical institutions... The government, with support from the World Bank, has been conducting the ‘technical education quality improvement programme’, under which 127 engineering institutions were covered for quality improvement in its first phase from 2002 to 2009. In the second phase from 2010 to 2014, it has been envisaged to cover another 190 engineering institutions.
Growth in the agriculture sector is important for alleviation of poverty, promotion of inclusive growth, sustenance of food security and generation of employment opportunities. The average growth rate in agriculture and allied sectors during the Eleventh Plan period was 3.3 per cent, with 2.8 per cent growth in 2011-12, which is the terminal year of the Plan. To accelerate the overall economic growth rate from the current levels, much higher growth in the agriculture sector will be required, of say, four per cent annually, as envisaged for the Twelfth Plan period.
Improvement in agricultural productivity would be important to accelerate growth in this sector. Measures to improve productivity, such as diversification of high-yielding crops, improvement in seed replacement rate, use of high-yielding hybrid seeds, improvement in water management practices and promotion of balanced use of fertilisers and pesticides should be some of our areas of focus. We should also increase the technological base of our agricultural sector.
As the finance minister, I had outlined a four-pronged strategy as part of the Union Budget for 2010-11 to push growth in the agriculture sector. The four components of the strategy comprised of extending the green revolution to the eastern region of the country, reducing the significant wastage in storage as well as in the operations of the existing food supply chains, improving credit availability to the farmers and give impetus to the food processing industry by providing state-of-the-art infrastructure. These strategies have led to positive outcomes in the sector and should help usher in a second green revolution.
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The service sector is the dominant sector of our economy, contributing close to 60 per cent of our GDP. Hence, any strategy for enhancing economic growth should focus on facilitating the growth of important services, such as finance and banking, information technology (IT) and telecommunications. Though India has an important position in the global IT and IT-enabled services, its prominence is being challenged by new emerging economies...
The financial sector in our country is one of the well-regulated sectors. The fact that the recent global financial crises has not affected us, as it has some of the stronger economies, is a testimony to the maturity of our regulation. Yet, nevertheless to realise the full potential of this sector and achieve an accelerated growth and inclusion, further reforms are required in banking, pension and insurance.
The high economic growth that we have envisaged for our nation will count for nothing, unless we are able to translate this into tangible benefits of the poorer sections of our society. When 30 per cent of our population lives below the poverty line and 26 per cent are illiterate, ‘inclusion’ cannot merely be a slogan, but a compelling goal. India’s economy is the sum total of its states’ economies. States with large economies are crucial for growth of the national economy. Maharashtra, Uttar Pradesh, Tamil Nadu, Andhra Pradesh and Gujarat, the top five states in terms of economic size, contribute close to half the country’s GDP. Though only one state in this list is from the northern region of the country, the share of the northern states in the country’s GDP is around 21.4 per cent.
Of the five economically biggest states, only Maharashtra and Gujarat grew by more than eight per cent in 2011-12. But there is a perceptible deceleration in these states, from the high levels of growth achieved by them in the previous two years. Among the states in northern India, Uttar Pradesh and Punjab have grown at a rate less than the average growth of the country in 2011-12. This needs to change. I am happy to note that among the states with larger economies, Delhi, Madhya Pradesh, Bihar and Chhattisgarh, have registered growth of above 10 per cent in 2011-12. This is no mean achievement considering the slowdown in the global and national economy.
Excerpts from President Pranab Mukherjee’s speech at the inauguration of Northern India Chief Minister’s Conclave – ‘Refueling Growth’ by the Punjab Haryana Delhi Chambers of Commerce and Industry in New Delhi on December 15