New Delhi: The Indian industry and infrastructure sector's real challenge is to bring in adequate private investment in collaboration with the public sector, said the Economic Survey 2018-19.
"The real challenge lies in bringing adequate private investment across the country with the collaboration of public sector. Along with physical infrastructure; provision of social infrastructure is also equally important as these two would determine where India will be placed in the world by 2030," said the survey presented in Parliament by Finance Minister Nirmala Sitharaman on Thursday.
Public Private Partnerships are quintessential for addressing infrastructure gaps in the country, it added.
As per the survey for achieving the combined potential of "Industry 4.0 and Next Generation Infrastructure", it is necessary to get rid of the obstructions the sectors are facing.
"As an emerging economy, the scope for 'Industry 4.0 and Next Generation Infrastructure' is enormous. To experience the potential of the perfect blend of these two, it is necessary to clear the decks which are obstructing the way forward," it said.
According to the Economic Survey, Index of Industrial Production (IIP) registered 3.6 per cent growth in 2018-19 as compared to 4.4 per cent rate in 2017-18.
It attributed the moderation in IIP growth to the subdued manufacturing activities in Q3 and Q4 of 2018-19.
The overall index of eight core industries registered a growth of 4.3 per cent in 2018-19, similar to the increase achieved in 2017-18.
"There is a need for establishing an institutional mechanism to deal with time-bound resolution of disputes in the infrastructure sector," said the survey.
The Economic Survey of India for the year 2018-19 tabled in Parliament on Thursday has suggested deregulation of labour laws to create more jobs in the country.
The survey report was tabled in Parliament ahead of the Union Budget that is scheduled to be presented by Finance Minister Nirmala Sitharaman on July 5.
The Survey cites the example of the northwestern Indian state of Rajasthan where significantly more number of jobs were created, as compared to the rest of the states, following deregulation of labour law restrictions.
As per the Survey, no major labour reforms were initiated by the states in between the years 2007 and 2014. In the year 2014, Rajasthan was the first state in the country to introduce labour reforms in the major Acts. Thereafter, many states followed Rajasthan.
A comparison between the indicators for labour, capital and productivity of manufacturing firms makes it clear that flexibility in labour laws created a more conducive environment for growth of industry and employment generation.
The report further shows that those states which were rigid in respect of their labour laws have not only suffered in all dimensions but have also been unable to create enough employment. These states have also failed to attract adequate capital investment which is necessary for job creation.
States that have made the transition towards flexible labour laws have been found to be 25.4 per cent more productive than their counterparts in other states that continue to reel under rigid labour laws.
Even as headwinds continue to hurt various sectors especially manufacturing, the Economic Survey has projected India would grow at 7 per cent in 2019-20 and maintain its fastest growing large economy tag in the world.
The forecast has come close on the heels of India registering slowdown in the last four quarters with the January-March period recording the slowest pace in last five years.
"The year 2019-20 has delivered a huge political mandate for the government, which augurs well for high economic growth. Real GDP growth for the year 2019-20 is projected at 7 per cent, reflecting a recovery in the economy after a deceleration in the growth momentum throughout 2018-19," the Survey said.
Maintaining that both downside risks and upside prospects persist in 2019-20, the Survey said that investment cycle is expected to pick up in FY20 on the back of higher credit growth and improved demand.
Further, the accommodative monetary policy is expected to reduce lending rates provided transmission mechanism improves. The decline in non-performing assets (NPAs) as a result of resolution of stressed assets is set to push the capex cycle.
The Modi government's flagship economic document said that political stability in the country should push the animal spirits of the economy, while higher capacity utilisation and uptick in business expectations should increase investment activity in 2019-20.
Revival of consumption would, however, be key for growth. The newly-launched PM Kisan Scheme, that promises to transfer Rs 6,000 cash in the bank accounts of rural households, is expected to push rural wages and hence demand.
"However, downside risks to consumption remain. The extent of recovery in the farm sector and farm prices will decide the push to rural consumption, which is also dependent on the situation of the monsoon," the Survey noted. (IANS)
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