The Hindu Business Line : Focus on growth

Despite claims of a thrust to industry, promotion of gainful employment and a boost to industrial production for sustained GDP growth, the Budget brings little cheer to the manufacturing sector.

The Finance Minister calls for a 10 per cent growth in the industries sector to achieve a sustained GDP growth rate of 7-8 per cent. How is this possible when the real issues confronting the sector, such as rising power, energy and fuel costs, excessive taxation and WTO impact, are not addressed?

In a developing country , increasing energy costs, which lead to increased cost of production, reduce competitiveness. Hence, the pricing of energy inputs should not be left to the oil companies or such agencies. There should be a regulator in place to check price levels.

The peak duty rate remains unchanged at 20 per cent. Last year's growth rate of 6.2 per cent in the sector is to be assessed in this backdrop. The sector is rendered incapable of good delivery due to the incidence of an extra average 15 per cent duty on inputs and energy, which effectively pushes the bound duty to 35 per cent.

The vulnerable duty structure provides ample scope for dumping. A direct consequence of the above is evident from the mounting number of cases filed by industry before the anti-dumping body concerned. Still there are good signs in the Budget, which is marked by a change in policy and direction.

An Investment Commission, which will have the broad authority of the Government to engage, discuss with and invite domestic and foreign businesses to invest in India, and a National Manufacturing Competitiveness Council, to serve as a continuing forum for policy dialogue to energise and sustain the growth of manufacturing units will be set up to suggest measures for enhancing competitiveness in the manufacturing sector.

M. P. Sukumaran Nair

Kochi

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