Govt panel to study impact

Apprehending a slowdown in the growth of the economy due to the hardening of interest rates, the appreciating rupee and falling tariffs, the government has decided to set up a group to discuss the impact of these changes on the economy and suggest measures to tackle it.

The decision to set up the group was taken in a recent meeting of the High Level Committee on Manufacturing chaired by Prime Minister Manmohan Singh. The meeting was convened by the National Manufacturing Competitiveness Council, the body that suggests ways and means for enhancing the competitiveness of the manufacturing sector.

The committee was of the view that rupee appreciation and falling tariffs were eroding the competitiveness of the economy and asked for an informed discussion on the impact of these developments and take action accordingly.

In the past one year, the rupee has risen by about 5 per cent and tariff has also come down from 15 per cent to 10 per cent.

"The members of the group are yet to be finalised. Some names are being discussed. Industry representatives may also be included in it. The group will also look into the impact of free trade area on the economy," a government official said.

The committee also pondered over measures needed to sustain the present high rate of manufacturing. The growth rate of manufacturing, which averaged 8.2 per cent in 2005-06 has registered 11.3 per cent growth in 2006-07. It surged to 12.9 per cent in March 2007.

It emphasised the need to build additional capacity through investment of higher order to sustain the current level of high growth.

The committee said that it is a major challenge to stimulate such investment and to make sure that it happens in the right sectors.

Holding that the talent crunch is going to be a major bottleneck in the growth of the economy, the committee called for urgent and coordinated effort to address this issue.

The High Level Committee on Manufacturing includes Finance Minister P Chidambaram, Commerce Minister Kamal Nath, Planning Commission Deputy Chairman MS Ahluwalia and National Manufacturing Competitiveness Council Chairman V Krishnamurthy among others.