Facilitate growth of labour intensive industries: Survey

As jobs were getting lost by the thousands as a fall-out of the economic downturn, the Economic Survey today asked the government to review labour laws for pushing growth in employee-intensive sectors.     

"...There is an imperative need to facilitate the growth of labour-intensive industries, especially by reviewing labour laws and labour market regulations," said the pre-Budget Survey that was tabled in Parliament.     

It said the manufacturing employment trends in the country are "not-so-encouraging".     

"Besides, the growth in many industries is constrained by the acute scarcity\depleting reserves of important raw materials like coal, iron ore, natural gas and forestry resources," it said.     

The Survey said industrial sector recorded a growth of 2.4 per cent in the last fiscal against 8.5 per cent in the year ago period. "The pace of slowdown accelerated in the second half of 2008-09 with the sudden worsening of the international financial situation and global economic outlook," it said.     

The Survey said only two out of 17 industrial groups - beverages and tobacco and machinery - grew at robust rates during 2008-09 despite high base.

Of the eight industrial groups that witnessed a decline in production, the high base factor was significant only for three items — leather products, wood products and jute textiles.     

On sector-wise growth, the Survey said the food products index declined by 9.6 per cent in 2008-09 (against a growth rate of 7 per cent in 2007-08), cotton textiles by 2.8 per cent, leather by 7 per cent and rubber and plastic by 1.5 per cent.     

It further said the last fiscal was a "watershed year" for the iron and steel industry while the metal products segment saw the second consecutive year of decline.     

"It can therefore be said that 2008-09 was characterised by a decline in growth largely on account of a slowdown rather than due to high base in the previous year," it said.     

However, the Survey added the size of the Indian market and the unmet demand for industrial products provide reasonable hope that demand would not be a constraining factor.     

"There is also reasonable consensus that given the market situation, Indian industry is unlikely to face a price deflation," it said.

"The fact that India has a large domestic market with immense absorptive capacity for industrial goods as also inputs for the development of the infrastructure implies that the demand side provides scope for expansion," the survey added.