The Hindu Business Line : Proposals to stimulate industrial growth

There has been some moderation in the index of production of the six core infrastructure industries as well as in the overall index of industrial production for the period April-December 2007-08.

The decline has been somewhat sharp in the case of consumer goods, especially consumer durables. The silver lining is that the growth in capital goods is still very high at 20.2 per cent, indicating that industry continues to make huge capital investm ents and has a positive outlook about the future.

Manufacturing industries that have grown more slowly than the average include food products, cotton textiles, textile products including apparel, paper and transport equipment. Among the reasons for the moderation are a rise in interest rates and the appreciation of the Rupee. There are limits to monetary policy accommodation, especially when the need is to maintain price stability.

However, some steps can be taken on the fiscal side and I shall, presently, place before the House some proposals in order to stimulate industrial growth. Our goal is to take the manufacturing growth rate to a double digit. This will also call for more reforms in the coal and electricity sectors as well as confronting oligopolistic tendencies in the cement and steel sectors.

The two principal schemes of the Ministry of Textiles - the Scheme for Integrated Textile Parks (SITP) and the Technology Upgradation Fund (TUF) - will be continued in the Eleventh Plan period. All 30 integrated textile parks have been approved and 20 units in four parks have commenced production. I propose to maintain the provision for SITP at Rs 450 crore in 2008-09. The provision for TUF will be increased from Rs 911 crore in the current year to Rs 1,090 crore in 2008-09.

Cluster approach

The cluster approach to the development of the handloom sector has made rapid progress. 250 clusters are being developed. 443 yarn banks have been established. By March 2008, over 17 lakh families of weavers will be covered under the health insurance scheme. I propose to increase the allocation to Rs 340 crore in 2008-09.

In order to scale up both infrastructure and production, it is proposed to take up six centres for development as mega-clusters. Varanasi and Sibsagar will be taken up for handlooms, Bhiwandi and Erode for powerlooms, and Narsapur and Moradabad for handicrafts. Each mega-cluster will require about Rs 70 crore. I propose to start the process with an initial provision of Rs 100 crore in 2008-09.

Merchandise exports have come under some pressure due to the appreciation of the Rupee and may fall just short of the target of US$ 160 billion, although the growth rate was strong at 21.8 per cent during April-December 2007-08. Relief was given to exporters in three tranches amounting to over Rs 8,000 crore. I may note that the interest cost of sterilisation through market stabilisation bonds (MSS), estimated at Rs 8,351 crore for the whole year is, in a sense, subsidy to the export sector. Government is sensitive to the needs of the export sector and will continue to respond sympathetically as the situation demands.

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