The Hindu Business Line : FICCI survey sees higher growth in core sectors

THE Federation of Indian Chambers of Commerce and Industry (FICCI) survey of core sector industries foresees higher growth in the first two quarters of 2004-05 (April-September) in the core sectors such as cement, steel, electric power generation, electrical equipment and machinery and oil and natural gas.

Further, the survey also pinpoints the basic issues and problems being currently faced by the individual sectors such as inverted duty structure, anomalous import tariff, rising prices of basic raw materials and its inadequate availability. The other issues facing the sectors include slow pace of implementation ofor non-implementation sectoral packages for a number of items, the need to improve the financial health of the State Electricity Boards (SEBs); the need for increased investment, higher allocation of funds and improvement in infrastructure.

Starting with the cement industry, the survey projects a growth rate between 8 and 9 per cent in the first two quarters. This projection has been kept on a higher level by the industry than the growth rate of 5.5 per cent achieved in 2003-04. The demand has actually picked up in the last quarter of 2003-04. The projection of 8-9 per cent growth is attainable because the cement industry is linked to housing, construction and infrastructural development, which are poised for growth, the survey reveals. Government's expenditure in road infrastructure including the National Highways Development Programme (NHDP) and incentives for growth of housing has generated more demand for cement. The booming construction activity would also create more demand.

For the steel sector, the survey confirms a growth rate of 7 to 8 per cent growth in production in the first two quarters of 2004-05. The Indian steel industry appears to be heading for good times with strong domestic demand and a surging demand from China, it states. The factor driving the demand for steel is booming construction activity.

The growth in domestic demand for automobiles and the increasing trend of outsourcing auto components by global original equipment manufacturers (OEM's) from India would give an impetus to the steel industry. The white goods segment, another key consumer of steel, is likely to have healthy demand growth. Regarding electric power generation, the survey projects that this sector is expected to continue the same trend in the first two quarters of 2004-05 and may even achieve an overall growth rate of six per cent . The survey projects overall growth above10 per cent for the electrical equipment and machinery industry which is growing at a rate of 10 per cent annually.

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