Eco Survey says infra bottlenecks weakening industrial output

New Delhi: This is as frank as it could get in officialdom. This year’s Economic Survey, which has been crafted by Raghuram Rajan, is quite critical of the very government which is presenting this economic report card to the people.

Take the section titled “Industry” for example and Rajan’s candour is apparent. He has pointed towards infrastructural bottlenecks in sectors like roads, power generation, railways and ports to say that industrial production has remained weak.

[caption id=“attachment_641726” align=“alignleft” width=“380”] Now only if the Government were to heed Rajan’s advise in the near term. Reuters[/caption]

Something a lot of us have been saying all along - our infrastructure leaves a lot to be desired and apart from a weak overall investment climate, lack of infrastructural support is also hurting industry.

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The government’s Chief Economic Advisor has suggested that output of core sectors be accelerated and implementation of big ticket projects is speeded up.

Then, Rajan has voiced another concern the government usually ignores - low level of research and development by Indian companies and inadequate availability of skilled manpower.

“From the long-term point of view, low level of R&D and inadequate availability of skilled manpower would adversely affect India’s competitiveness and the manufacturing growth,” he has said in the Survey.

His recipe? Allow R&D incubators under public private partnerships and let them distribute profits back to investors.

The much touted term, “ease of doing business” which is largely used by corporate honchos, also finds a mention in the Survey.

Rajan has lamented the difficulty of doing business in India, saying “India has not improved significantly in terms of the ease of doing business and ranks very low in comparison to other peers. The MSME (Micro, Small and Medium Enterprises) sector in particular faces multiple approvals and operational restrictions.”

The Survey has projected a 6.1-6.7 percent growth for the next fiscal after a deceleration to around 5% this year, with inflation seen falling slightly to 6.2-6.6 percent. “The slowdown is a wake-up call for increasing the pace of actions and reforms,” said the survey, adding that India has navigated difficult times as these before, and with good policies, it will again come through stronger.

Rajan has said that as per indications from the latest seasonally adjusted annualised growth of industrial output, growth of industry could remain “moderately positive at around 3 per cent for the current year”.

He says there are currently mixed signals on whether growth upturn is underway or not. Some positives include: products or product groups which constitute the IIP indicate the number of products with a negative growth have declined from 182 in Q4 of 2011-12 to 160 in October-November 2012.

The RBI’s business expectation index has recorded a moderately positive growth in Q3 2012-13 after negative growth for sis previous quarters.

Now only if the Government were to heed Rajan’s advise in the near term.