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Infrastructure growth signals economic upturn

The mid-year economic review said signals of marked upturn in economic activity were evident from the impressive growth achieved by the six core and infrastructure industries in the first seven months of 2002-03.

Six infrastructure industries (electricity generation, coal, steel, crude oil refinery throughput and cement) grew by 5.6 per cent during April-October 2002 compared with 2.0 per cent in the corresponding previous period, the review presented by Finance Minister Jaswant Singh, tabled in Lok Sabha, said on Tuesday.

Cement and Steel recorded impressive growth rates of 9.3 and 7.3 per cent respectively.

"Satisfactory performance of these industries is largely attributable to the demand forthcoming from housing and road construction activities," it said.

While housing revived owing to decline in interest rates for housing finance and simplification of procedures, road construction has gathered momentum from the progress of National Highway Development Project.

Ports and railways have also done much better in the first six months of the current year compared with the corresponding previous period. Coastal shipment of coal had also exceeded its target.

Credit to the housing sector constituted a significantly higher 38 per cent of the total non-food credit, the review said adding service sector contributed nearly 50 per cent of the country's GDP.

Revision of travel advisories by Australia, Britain, France, Japan and USA and the fiscal relief provided to the tourism sector in the budget had led to pick up in tourist activity in the country, the review said.

"Inadequate availability of quality infrastructure at internationally competitive prices has long been recognised as a handicap for the development of the Indian economy.

Bottlenecks in transportation, including port handling, and unreliable and expensive power supply are two impediments that need redressal," the Mid-Year Review said.

Laying the roadmap for future, it said corporatisation of ports and public-private partnerships needed speedier execution.

Restructuring of rail services through rationaliation of user charges, acceleration of power sector reforms by enacting the Electricity Bill and development of National Power Grid and limiting cost and time overruns of public infrastructure projects were key to rapid economic growth.

"The gcommitment to constantly invest in, and thus improve, both social and physical infrastructure, must continue. Investment in health, education, drinking water, and living environment, and improving the quality of life of citizens must be accelerated," the review said.

Stating that basic telephone subscribers have reached 38.43 million and cellular base increased to 6.43 million at the end of March 2002, it said "notwithstanding the country's remarkable progress in telecom in recent years, India continues to lag in comparison with like countries, in terms of numbers of both fixed and cellular subscribers per capita."

During the current year, tourism has shown an upward trend, with increased foreign tourist arrivals of 2,12,191 in October against 1,81,605 in October, 2001, the review added.

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