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| 'Growth may fall 1% due to poor rains' |
| BS Reporter / Chennai/ Bangalore Aug 22, 2009, 00:54 IST |
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Venu Srinivasan, managing director, TVS Motors Ltd and president of Confederation of Indian Industry (CII), today said that growth of Indian economy will come down 0.5-1 per cent this year due to poor monsoon and drought in several parts of the country. However, despite this, the Indian economy will be the second fastest-growing economy this year, he said.
“There are two parts to the drought. I think the first part is the plight of the people. I think there are millions who even at the end of the monsoon do not have drinking water and their crops have failed and they will be in the midst of an economic crisis as well,” he said.
Talking to reporters on the sidelines of a CEO conclave organised by the CII, here today, he said the first role both industry and government will have to play is to look at the plight of millions of these people who have been affected by the drought in large parts of central and northern India.
“The second part is economic growth. I think because it is coming after seven years of good rains, the economic growth may take a marginal hit of 0.5 per cent to 1 per cent. We still expect close to 6-7 per cent growth and most sectors, including manufacturing, will continue to grow. Rural demand for any product will get hit. Last year we were sustained by rural growth. This year urban growth will return,” he said.
The government has been quite seized of the various issues they have talked about. There will be good progress in the next few years in the Indian economy and in taking reforms further, he said.
He, however, said there will be some pressure on the commodity prices due to the poor monsoon in large parts of the country. “The world has reached the bottom of the commodity prices as of April this year. In future there will be inflationary pressures and food issue because of the poor monsoons, we are going to face some pressure on commodity prices,” he said.
Srinivasan, further said the existence of check posts between the states is hampering growth of the industry. “There is no FTA within India. There are check posts between states. With GST coming into force a major barrier will be lifted on internal trade,” he added.
I think that is the biggest reform the government has made,” he added.
The number of agencies the industry has to deal with are many. The government has to bring down the number of agencies like inspector of factories, ESI Act, PF and gratuity acts have not been addressed yet, he said adding the level of reform to improve productivity and competitiveness of Indian manufacturing is the next major challenge for our states.
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