Manufacturing Growth, Industrial Production, Inflaiton

Need for Growth in Manufacturing Sector

30 December 2014(Money Talk)

This is the FM Gold channel of AIR, In the Programme Money Talk now we bring you the dialogue on Need for Growth in Manufacturing Sector.

Participants are Prof. Aman Agarwal, Indian Institute of Finance and  Arjun J Choudry, Economic Journalist.

Need for Growth in manufacturing sector with reference to the latest initiative on the part of central govt. in approving ordinance route for the acquisition of Land whereby the Centre has some discretionary power over the state in the acquisition of Land till passing of the Amendment in the Act, when parliament begins.

Manufacturing sector is a key component – Indian and other countries – for more than 3 centuries; UK – grew at no industrialization at ; India till recently manufacturing come into the GDP Component; Spaceship – recently launched MOM – produced in this country; Skill & Non-Skilled labour; IMF & WB projected India’s Growth to be 6.5% and with the manufacturing sector to grow by 1.5 times; PM focus on Make in India Campaign and Foreign Investment; Land Acquisition be a major component – desire of the foreign participant – to have clarity of land acquisition norms;

New Act which was passed in Parliament in Jan 2014 – $300Bn projects were stalled due to barrier in the current act – ordinance to have overriding effect on the state act – allowing a kick start in the industries like power, Defence…

Expected to about $1 Trillion in primarily Manufacturing, i.e. FDI; generating Growth & Employment; Centre- State structure: Benefit both or hamper the State – Same type of governance in the Centre & State may benefit both else would hamper the India’s growth for tomorrow;

Another initiative taken by the central govt. under PM Modi – in the mining of Natural resources -  earlier law restricted growth in that sector – new initiative boosting not only business but also employment?

IIP figures are expected to boost up; fairly good amount of control over inflation; Currency stabilized, Global oil price gone down – these all will have indirect impact on the growth of Manufacturing sector and the purchasing power of the poor; 800 million people; projects struck up due to the bottle neck; India is blessed with 65% youth population between 15 years to 50 years of age which is productive age of human capacity- it need to be channelized in the right direction; to avert the illegal, terror, crime act – need to have an environment – Govt. in hand with the corporate – bringing ‘n’ number of projects – either under PPP mode or direct mode;

Parliamentary logjam – two initiative – two orders Foreign firms raise stake in Insurance sector – facilitating FDI , commercial mining of coal; this initiative in the part of Govt. due to the logjam in parliament; How do you view these type of steps taken by the govt. benefit at least in the short & medium term?

It would take at least 2-3 years – for the common man to see the benefit; it would help in Fiscal deficit – which govt. is focusing on; and will get sufficient fund to spend on certain welfare scheme; Ordinance is a small stance allow certain things to move on, certainly it is subjected to the parliament; India is a most progressive nation in terms of Growth and Promising return to any organization or individual worldwide; warm welcome received by PM from Japan, China, America, Australia both from the Govt. and from the people – shows the kind of positive outlook and kind of investment if we put our policy in the right direction;

PM Modi – Make in Indian campaign – would prove the share of manufacturing in the GDP form 15% to 30% like china’s share in the GDP; what extend the labour playing a role in it esp. skilled labour?

Labour certainly come in to play – majorly it would be unskilled labour, when they move to the second tier, they could utilize skilled; the positive wave bought by the new initiative reversed the feel European countries which feared about the new govt. to be Bharathiyatha, Swadeshi, Protectionist;

Tackle to factors of produciton - Land and Labour – ensure the growth in the Manufacturing sector, policy-wise; whereas in terms capital – unfortunately Repo rate was not cut; how do you see the non-availability of cheap capital for the business or individual for investment, as a factor that would retard growth?

Ease of getting the capital which is very critical; most of the equity firm (Angel investor) are very high capital cost; large segment of MSME, manufacturing industries, small scale or mid-sized industries were not able to get the locked-in capital lies with the Banks & financial institutions; It is very large institutions get the capital;

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Industrial Production and Inflation

13 January 2015(Money Talk)

This is the FM Gold channel of AIR, In the Programme Money Talk now we bring you the dialogue on Industrial production & Inflation

Participants are Ashok Das Gupta, Senior Economic Journalist and Sivaji Sarkar, Editor, Hindustan Samachar.

Industrial production in November has gone up by 3.8%, at the same time if we take an average 6 monthly basis; it has gone up by 2.2%. Good Indication of the Economy; Area of concern is the increasing retail prices – that have gone down a bit in the last cycle has again up 55% now; Indian economy has seen many kinds of good signs and upheaval; Rupee two days back was high, now come down to 62; Is the Indian Economy is in right track?

Track is pity bumpy; two data figures – IIP up by 3.8% in Nov., Retail Inflation up by 5% in Nov., first one is positive whereas the second one is negative; for 8 months industrial growth was just 2% and now 3.8% raise in Nov. is due to the Base effect; IIP major weightage given to the Manufacturing; if we look at the Manuf. Figures over the months – the numbers are very dismal;

Many reforms – Bills – Ordinance; Modification of the tax structure – to attract industries and all Investors e.g. Paravsi Barathiya Program, Vibrant Gujarat – bought lot of enthusiasm among the investors; Manufacturing sector is not growing – real income of the people remain stagnated – neutralization due to Inflation – employment generation is not in surge; what are the ways to correct it?

Make in India campaign – stress on the Manufacturing; Manuf. Sector is the main sector for the job creation – surge in growth is not possible without this; Debt market has very positive return, Equity market doing good, as it has potential for growth & development over the longer term is seen very good through India among the emerging markets – Brings in more FII;

Govt.  need to really stress on the Agriculture which is 14% of GDP but employ about 70 Crore People (58 – 60%);

Target Agriculture as per the Planning commission has pegged at 4%, it was one particular year it touched 3.9%; 4% growth in the Agriculture sector is a long cherished dream; Manuf. Sector if grow could generate employment, and unproductive/extra labour depending on the Agriculture could be shifted to Manuf. Sector; this would take the GDP contribution of the manuf. Sector at least to 25%;

Cheaper products of poorer quality – imported from China – how we can change the dynamic system to create a new paradigm?

Lighting industries, Electrical industries are wiped out by the Cheaper product of Global manufacturing giant like china; Govt. must look in to the aspects of the Cost of Production; Despite the retail inflation, many analysts expect RBI to cut 25 basis point cut; this cut could not benefit neither but only for creating a positive sentiment; Easing of interest rate will take place on sustain base only when the inflation coming down at sustain level;

Manufacturing can boom only when there is demand – car loan, home loan when interest rate are eased – holistic look at the entire economy is essential;

Investor confident – public sector has to give the push; Investment are not taking to the expected level; Relook at the economic policy also required;

Blocks – Ease of Doing business – reducing Taxation to bring down the Cost;