Survey expects pick-up in industrial sector in FY13

Industrial growth is likely to rebound next fiscal on moderation in inflation and easing global commodity prices, the Economic Survey said today.

Besides, the government is moving quickly to clear bottlenecks in critical sectors such as power, it added.

"With the easing of headline inflation, moderation in commodities prices in the international market, and revival of manufacturing performance in recent months in the major economies, India's industrial sector is expected to rebound during the next financial year," Economic Survey 2011-12 said.

The growth of industrial sector during 2011-12 is pegged between 4 and 5%, less than the annual growth rates achieved in the recent past and far below the potential.

During the April-January period of this fiscal, the factory output growth, as measures on the Index of Industrial Production was 4% year-on-year. However, the IIP numbers for January showed pick up.

Inflation, which remained near 9% during most of this fiscal, was at 6.95% in February.

However, the survey said, the challenges faced in the short-term to boost industry would be to shore up business sentiment, spur investment and identify bottlenecks that can be removed in a reasonably short period of time.

"The government has already made some quick moves to clear bottlenecks in some critical sectors such as coal and power and is also pushing forward project implementation in some key infrastructure sectors," it added.

The Committee of Secretaries, headed by Prime Minister Manmohan Singh's Principal Secretary Pulok Chatterjee, has been addressing issues of power sector to boost investors' confidence.

Meanwhile, the central bank in its mid-quarter Monetary Policy Review has said that while growth in the capital goods and intermediate goods sectors was negative during the first 10 months of 2011-12, growth in the basic goods and consumer goods decelerated marginally.

RBI said corporate sales growth in third quarter of 2011-12 was robust, margins moderated and reflecting increasing difficulty in passing on rising input prices.