Assocham Predicts 8.5 Per Cent Industrial Growth

Leading industry associations differ over growth prospects in 1997-98 with Assocham predicting a lower 8.5 per cent industrial growth in 1997-98 against an optimistic 12 per cent by CII.

Concerned over the dip in industrial growth rate during 1996-97 Assocham will discuss the challenges to the industrial upswing at its forthcoming managing committee meeting on June 20 and come out with a policy prescription to spur industrial performance.

A rebound in industrial growth will be delayed considering the dismal performance towards the end of last fiscal, Assocham secretary general V Raghuraman said. He said the performance this year could be affected by non-implementation of a good monetary policy announced for the first half of 1997-98.

 

Banks are still reluctant to lend and we have written to all our members to assess the situation, he said and pointed out the chamber had forewarned a slump in industrial growth due to the tight monetary conditions prevailing last year.

CII president N Kumar had maintained that the industrial growth would reach a figure of 12 per cent in the current financial year in his first press conference after taking over as the chamber chief in April.

Raghuraman expressed concern about the dip in exports growth rate in 1996-97 adding that the lack of proper policy measures to build infrastructure is impeding the overall growth.

On the power scenario Raghuraman said the country is paying a heavy price as a proper policy for providing linkages, including fuel, has not been put in place.

The other problems faced by the sector are financing and relying on foreign investors entirely to meet the power demand, he said adding that all the issues would be discussed in detail at its meeting with managing committee members.

However, he said the industrial growth may record a 12 per cent growth in the second half of the financial year provided interest rates remained low.

Industrial recovery would spur demand for imports which is likely to be near its targeted rate of around 15 per cent, he said.

With the improvement in global outlook for trade, exports are also expected to grow by atleast 15 per cent if supported by favourable policies.

Monetary restraint would help rein in inflation to some extent though pressures would be exerted from the cost push angle, he said adding in the most favourable scenario, average inflation would hover around the same level of six to seven per cent as last year.