As per government estimates, Indian economy grew by 6.9% in 2011-12 fiscal
New Delhi: The Indian government may lower the growth projections for the last fiscal, which was pegged at 6.9%, in view of sharp downward revision of industrial output numbers for January.
“The government might revise 2011-12 GDP growth figure downwards. Officials of the Department of Economic Affairs will meet soon to assess the impact of the lower January IIP numbers on last year's economic growth,” a Finance Ministry official told PTI.
As per government estimates, Indian economy grew by 6.9% in 2011-12 fiscal. The overall growth data was computed after taking into account 6.8% industrial output in January.
However, as per the recent data by the Central Statistical Organisation (CSO) the January industrial output works out to be 1.1% and not 6.8% as estimated earlier.
Accordingly, the cumulative growth figure for April-January (2011-12) was lowered to 3.4%, from 4%.
The downward revision, sources said, could have a bearing on the economic growth figures for the last fiscal, which was 6.9%, the lowest in the previous three financial years.
Finance Minister Pranab Mukherjee had already asked the concerned authorities to look into the impact of sharp revision of the Index of Industrial Production (IIP) numbers and termed it as “totally baffling”.
“I can understand if there is error in calculating 0.1% of 0.2%, but from 6.8% to 1.1%, it is totally baffling,” Mr Mukherjee had said.
“We do not anticipate any improvement in economic activity on account of the budget proposals. Consequently, we have maintained our GDP growth forecast for 2012-13 at 7.6%,” CMIE said in its monthly report
Mumbai: Centre for Monitoring Indian Economy (CMIE) has said that it maintains its GDP growth forecast for FY13 at 7.6%, against the estimated 6.8% in FY12, reports PTI.
The union budget for 2012-13 failed to provide any thrust to the slacking pace of economic growth, as no major reforms were announced, nor any concrete measures were introduced to enforce fiscal discipline, CMIE said.
“We do not anticipate any improvement in economic activity on account of the budget proposals. Consequently, we have maintained our GDP growth forecast for 2012-13 at 7.6% against the estimated rise of 6.8% in 2011-12,” CMIE said in its monthly report in Mumbai.
The government did raise excise duty and service tax from 10% to 12%. This is expected to lead to inflationary pressure, both at the wholesale and retail level.
However, demand is not expected to be affected on account of higher inflation, it added.
“Our revised inflation forecast for FY13, after taking into account the duty hike, at 6.5%, still reflects a fall in inflation from the high levels of 9%-10% recorded in the preceding two fiscal years. Easing inflation is expected to provide some leeway for the existing high interest rates to climb down, though this is expected to happen only by the second half of FY13,” the report said.
The main driver of economic growth in FY13 will be the industrial sector. Growth is expected to accelerate to 6.7% during the year compared to 4.1% in the preceding year. Revival in mining sector output, faster growth in manufacturing sector and robust increase in electricity generation will drive the growth.
Manufacturing sector output is expected to rise at a faster pace of 5.1% in FY13, compared to 4.1% in FY12. A revival in growth of machinery and equipment, electrical machinery, textiles and ready-made garments sector as well as faster growth in basic metals production is expected to drive the growth in this sector.
Mining sector output is expected to post a recovery from the 2.3% decline in FY12 and grow by 5.5% in FY 13. Higher crude oil production and improvement in natural gas output is expected to be reflected in improved growth prospects for the sector.
Higher imports of LNG, improved availability of coal and uranium, expectation of a normal rainfall coupled with a rise in capacity will reflect in 13.2% increase in power generation during FY13.
Services sector is also projected to grow by 9.3% in FY13, marginally higher than the 9% growth estimated in FY12, CMIE said.
Rehabilitation of sick MSMEs could not be taken up due to non-availability of promoters' contribution in a large number of cases and there is need to set up separate fund for it, the central bank feels
Mumbai: The Reserve Bank has suggested setting up a rehabilitation fund for reviving sick micro, small and medium enterprises (MSMEs) in the wake of rising number of such units, reports PTI.
“...rehabilitation of sick MSMEs could not be taken up due to non-availability of promoters' contribution in a large number of cases, RBI has recommended to the government to set up a 'rehabilitation fund' for sick MSMEs,” RBI deputy governor Dr KC Chakrabarty said at a conclave in Mumbai.
According to RBI data, the number of sick units in MSME sector has gone up by 16% to 90,141 units in March 2011 from 77,723 in March 2010.
On the MSE (Medium and Small Enterprises) loan policy, the RBI deputy governor said, “...banks have also been advised to review and put in place MSE loan policy, restructuring or rehabilitation policy and non-discretionary one time settlement scheme for recovery of non-performing loans, duly approved by their board of directors.”
Dr Chakrabarty, during the conclave last week, also said that in spite of various measures taken by the RBI and the government, availability of credit for the sector remains a major issue.
“There is a need to implement a corporate governance code for SME sector and adoption of corporate governance framework by SMEs in India is indispensable for taking this sector to a higher growth trajectory,” he said.
Dr Chakrabarty also said there is a growing need for venture or risk capital for financing high growth potential and start-up SMEs.
Finance Minister Pranab Mukherjee in his Budget 2012-13 has proposed setting up a Rs5,000 crore ‘India Opportunities Venture Fund’ with SIDBI to enhance availability of equity to the SME sector.
Expressing concern over the flow of equity capital in the sector, the RBI deputy governor said, “At present, there is almost negligible flow of equity capital into this sector. Market regulator SEBI has permitted BSE and NSE to set up an exchange for MSMEs, which would help SMEs to raise funds from capital markets.”
According to the data provided by the 4th Census of the MSME sector, about 92.77% of units had no access to finance or depended on self finance.
It said only, 5.18% of units, availed finance through institutional sources with a further 2.05% relying on non-institutional sources.
“In this regard, the various initiatives taken by the government and RBI include adoption of the business correspondent (BC) model, relaxation of KYC norms, simplified branch authorisation, mandatory opening of 25% of new branches in unbanked rural centres etc...,” Dr Chakrabarty said.
However, the SME sector often feels the constraint of non-availability of skilled labour, he said.
The government and various state governments have been implementing a number of schemes and programs over the years.
The MSME ministry aims to train 5.72 lakh persons in the year 2012-13 through its various programmes for development of self-employment opportunities as well as wage employment opportunities in the country.