A grim outlook

Since analysts are united that the overall projection is more ambitious than that of independent estimates,this means there is going to be little growth for the sector. As the construction sector responds immediately to changes in the pace of the overall growth of the economy,unlike agriculture,unless the overall growth scenario gets better there is going to be little improvement there. As economist Arvind Panagariya’s paper “Growth and development in the Indian states” shows,the bulk of industrial employment is now in tiny enterprises,which means low wages. This is unlike,say,electricity,which does not have this co-relation.

There are no immediate solutions. But C. Rangarajan’s panel has made some excellent suggestions to ensure that next year this deadly cycle is broken and the virtuous cycle returns. Of the seven measures on his list,none depends on the legislature to go through. But each has a clear role in improving the growth rate of the economy. The Manmohan Singh government has to use each one of them to the full,including an integrated decision-making structure for high-impact infrastructure projects. As the three CAG reports issued on Friday show,playing favourites in the infrastructure sector boomerangs on the government — for example,in the case of the Sasan ultra mega power project,which despite bending rules,is nowhere near completion,or in pushing high value JNNURM projects on to ill-equipped city administrators. But getting these projects right can play a tremendous catalytic role in the construction and related employment generating sectors. The government has about eight months of this fiscal left to show that it has learned the right lessons.