CII president Shekhar Datta told Business Standard after a meeting of the organisation's national council here that while the CII is satisfied with the pace of liberalisation The performance of the infrastructure sector is a matter of concern to all of us.
CII sources said the meeting discussed the state of the economy based on the sector-wise report of the Association's Council (Ascon) and noted the areas of serious concern.
The report traced the sorry state of affairs to the absence of a cohesive policy on the infrastructure sector which is keeping investment worth crores in abeyance.
The sector (infrastructure) can have a deluge of funds from foreign investors who are interested to invest in this area, a note on the economy which was placed before the meeting said.
CII vice president N Kumar is understood to have presented the sector-wise review of the state of the industry following the Ascon meeting last night.
According to the CII assessment, the economic outlook is not rosy, with industrial growth slowing down at 7.7 per cent during April 1996 compared to 15.9 per cent in April 1995.
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The meeting also noted the upward trend in the inflation rate and said strong industrial growth and a reasonable supply of funds would help contain inflation.
While in the past few months the inflation remained at 4-5 per cent, latest data shows inflation has touched 5.7 per cent on August 24 on a point to point basis. This has been the result of upward revision of administered prices of various commodities.
CII expressed apprehension that the recent developments such as the bombing of Iraq would exert pressure on oil prices which account for a quarter of the country's imports, apart from disrupting trade and adversely affecting exports to these emerging markets.
The CII also noted that the external sector has been witnessing difficult times with total exports growing at 14.6 per cent and imports growing at 14.4 per cent during April-June this year. Exports stood at
$ 8,212 million and imports at $ 9,146 million during the period, with a trade gap of $ 0.934 million.
With a fresh round of disturbance in the Gulf area oil prices may be revised upwards. This would add to the burden of the import bill and may cause a severe forex drain. However, at present forex reserves are comfortable at $ 17.1 billion but may get eroded if the import bill swells or if the exports fail to pick up.
All the same, the CII noted with satisfaction the recent amendments in the Finance Bill such as exclusion of backward areas and sick units from the purview of MAT, measures to boost capital markets, reduction in excise duties on select items and rationalisation in the rate of customs duties.
However, still there is a pending agenda which needs to be addressed, the CII said.