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Journalism of Courage
Demand recovery is back for basic goods industries. According to the survey of Associated Council Ascon of the Confederation of Indian Industry CII, cement, fertilisers, paints and chemicals have registered a significant turnaround for the period April-March 2001-02 over the corresponding period the previous financial, while the industries which have recorded a decline in growth include aluminium, steel, and crude oil. However, the survey states that a sustained recovery requires keeping the reforms momentum going.
Cement production clocked a healthy 9.4 per cent for 2001-02, which is indicative of housing and construction activity picking up in the economy, the survey notes. According to the survey, inorder to enable the cement industry to sustain a higher growth rate, problems faced by the industry like high taxation 60 per cent of the ex-factory price, hike in royalty rate in limestone, cross subsidisation of passenger traffic with goods traffic by railways need to be addressed.
Paints have also shown a relatively high growth of 10 per cent but high cost of raw materials, particularly petroleum products accounting for 70 per cent of production and high customs duty on raw materials and shortage of critical petrochemicals continue to act as bottlenecks to higher growth in the industry.
The fertiliser sector has also achieved positive growth of 1.5 per cent compared to 3.3 per cent in the last financial year. Limitation in gas supply and shortage of the feed stock are the major raw materials and power problems are the main issues which require immediate attention of the government, the survey states.
Continuous inflow of imports of seconds and defectives steel under advance license, issues relating to DEPB rates, poor investment in infrastructure continue to bog this vital sector with overall impact on the growth of the allied industry sectors and overall economy. The trade actions by the US and EU have also impacted the growth prospects of this sector.
The issues plaguing the industry are capacity utilization by most industries increased cost of exploration and production frequent power shutdown by State Electricity Boards.
According to the survey, the proposed spending on infrastructure and road development projects would help to kick-start the growth in related manufacturing segments and the government should the required steps to address the problems of the industry.
