Govt Woes Stifle Growth In 97-98, Says Assocham

Associated Chambers of Commerce & Industry (Assocham) president L Lakshman yesterday said he did not expect the economy to show a growth rate of about 5.5 per cent in the current fiscal.

Addressing newspapers here on the eve of Assochams management committee meeting, Lakshman said an improvement in 1997-98 is almost ruled out as the new government is expected to be in place only in March.

In the long-term, however, the chamber believes the economy will grow at an average rate of about 8 per cent per annum.

The industrial, agricultural and service sector will contribute 11 per cent, 4 per cent and 10 per cent respectively to this, he said.

 

He said fiscal deficit should be reined in at 2.5 per cent of GDP. This can be done through a privatisation/disinvestment programme, which can rake in Rs 100,000 crore in a five-year period. Infrastructure development should be the engine for growth and will also determine the overall growth of the economy.

In areas like road and ports development, the government has to take the lead in development as has been the case all over the world, Lakshman said. He stressed the need for directing low-cost funds to these projects.

Four-laning of existing expressways and building a national network of superways will create demand in core sectors like cement and steel, which will spur overall economic growth, he said.

He said the cry for protectionism from domestic industry is a worldwide phenomenon. He cited the case of leading US car manufacturers seeking protection from Japanese car makers. The government, he said, should do a proper analysis of its decisions before arriving at any decision.

On the basmati patent issue, he said the commerce ministry and other departments should catch up with the new developments in the international arena.

We have been isolated in external trade for so long that we are not aware of developments in areas like patents before it is too late, he said. The devaluation in S-E currencies will adversely affect exports of gem & jewellery, pulp & spices, he said.

He felt real interest rates are still very high and render industry uncompetitive in world trade. At present, availability of credit is not a problem because there is really no demand.