The PHD Chamber of Commerce and Industry has said that current trends indicate that the target of 12 per cent industrial growth will be missed in 1997-98 due to demand slowdown of manufactured goods, consumer goods and capital goods, and the non-responsive infrastructure sector.
A PHDCCI review paper on Current State of National Economy blames the fluid political situation for the prevailing indifference towards growth inducing government policies. As a result, the monthly index of industrial production, averaging 6.7 per cent in 1996-97 against 11.6 per cent in the previous year, has not been reversed as yet.
The review paper to be discussed at todays PHDCCI managing committee meeting says that while the 5.7 per cent growth in GDP average of last four years was essentially due to a spurt in industrial activity, the lack of infrastructural growth and non-availability of adequate finances would hamper the revival of the economy. The demand-supply gap of power generation capacity at over 26.9 billion kwh and road network growth of 4.6 per cent, with only half of the total road kilometers being surfaced, have been identified as factors responsible for retarding industrial growth.
On export sector, the paper said the average turn around time for ships being four to 10 days as against the international norm of six to 48 hours, the unreliability of railways to carry goods to ports and the delay in cargo clearance at airports affect the revival of 25 per cent export growth.
The PHDCCI paper refers to the continuing slump in capital goods industry as a sign of depressed industrial growth this year so far.
However, the stagnating income levels responsible for lack of growth for consumer goods is projected to be reversed after the hike in salaries of government employees following the implementation of the fifth pay commission recommendations.
The review paper projects a climb-up in inflation by one or two per cent in the coming months due to an increase in money supply following a more liberal credit policy, hike in administered prices
of petroleum products and food items, besides the impact of the pay commission on the national exchequer.
