Taking India forward

The Indian economy has emerged with remarkable rapidity from the slowdown caused by the global crisis, with growth of 8.6 per cent (advance estimate) in 2010-11 and an expected 9 per cent next year.

This growth is almost broad based with the agriculture sector rebounding, while manufacturing continues its momentum, despite some slowdown in the third quarter and private services picking up.

The manufacturing sector, in particular, showed a remarkable robustness, growing at rates of 13 per cent and 9.8 per cent, respectively, during these two quarters.

In the services front, growth in the first two quarters of 2010-11 remained robust at 9.3 per cent and 9.8 per cent, respectively, while in the third quarter it moderated slightly to 8.3 per cent.

Growth story

In the India growth story, South India occupies a pre-eminent position in terms of its contribution to economic development. Tamil Nadu, Karnataka, Andhra Pradesh, Kerala and the Union Territory of Puducherry contribute over 22 per cent of India's GDP and 28 per cent of its employment since 2000, according to a McKinsey Study.

The study also says that over the past five years, South India has attracted around $75 billion worth of investments, with $65 billion in domestic and $10 billion in foreign investments. It is also important to note that these states rank top ten in GDP growth of India.

As a matter of fact, every State in the southern region specialises in one particular sector or industry which is another major strength for propelling growth. For instance, Karnataka and Andhra Pradesh have a strong base for the IT and ITeS industry under the services category. Whereas Tamil Nadu specialises in manufacturing sector for automotive engineering, textiles and apparel, electronic hardware manufacturing and in the case of Kerala, tourism is a major contributor to the State's growth. It is this diversity in the investment options has attracted the investors across the world towards South India.

CII Southern Region, coinciding with its annual regional meeting is organising a conference on ‘The next wave of growth – South India' on March 26, in Bangalore. The conference would envisage the road map for industrial growth in the next decade in South.

The CII report ‘Retaining South India's edge in India's growth story', that will be released at this conference highlights the current scenario, challenges restraining the growth and a set of recommendations to realize the potential of South India for a holistic growth. The knowledge partner for this report is McKinsey & Company. The report emphasises on the inevitable challenges ahead to realise the ambitious roadmap for the southern region as the major contributor to the country's growth.

challenges

To mention few challenges hindering the growth of the region are infrastructure, labour, policy / procedural issues and moving up the value chain across sectors. The report also prescribes a set of recommendations to overcome these challenges.

According to McKinsey estimates, the region's GDP has the potential to reach $700 billion by 2016, and approximately $1,200 billion by 2020. Together, Andhra Pradesh, Karnataka, Kerala, Puducherry and Tamil Nadu represent a GDP of $300 billion, behind only the top 30 economies of the world. To achieve this, a strategic partnership between the Government and industry should be created. PPP models have worked best for bringing a change in the country. I am sure from industry; we are more open to work with the Government.

(The author is Chairman, CII – Southern Region)

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