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Amidst global slowdown…<br>Indian economy was resilient in 2002-03: RBI
The Reserve Bank of India 2002-2003 Annual Report published recently describes the economy as a resilient one, since despite a number of adverse developments, both external and internal, the economy performed reasonably well.
"It is mostly the case in the world economic history that at least one of the three blocks, namely Japan, Europe and USA, has performed in time of rough weather. But in the past few years, it was an exceptional case, when all of them failed simultaneously which resulted in a synchronised global slowdown. Only two countries, India and China, were able to keep the momentum up - without which the fear of global recession cannot be ruled out," Dr Narendra Jadav, Principal Adviser, Department of Economics and Statistics, RBI, said, at the interactive session organised by the Indian Merchants' Chamber, Mumbai. He also added that the GDP growth rate of 4.3 per cent, which may seem abysmally small, should be judged in this context.
The RBI report also noted the recovery of the industrial sector after an extended slowdown. A modest revival in industrial activity, which set in by March 2002, has permeated all sectors in 2003, with the manufacturing sector contributing 86.2 per cent of the overall growth of Industrial Production. The manufacturing sector grew at a rate of 6 per cent closely followed by mining and quarrying at 5.8 per cent, as compared to 2001-2002. Growth in mining and quarrying reached a high in July 2002. The growth of electricity remained broadly unchanged, despite the persistence of demand-supply gaps.
Despite some shortfalls vis-à-vis the targets in key infrastructure industries, there was an overall improvement in production conditions in infrastructure during 2002-03. Improved growth in the finished steel industry was facilitated by strong external demand. On the other hand, the acceleration in the cement sector was mainly driven by domestic demand emanating from the growth in construction and housing. Electricity, on the other hand, continued to show low growth.
The report also argued that in order to sustain growth a critical minimum level of growth is required in infrastructure. Though the demand supply imbalances have been narrowed down since the second-half of the 1990s, infrastructure bottlenecks are considered to be major impediments to accelerate growth. Since investment in infrastructure is prone to many risks, finance has become a critical issue.
Amidst global slowdown…<br>Indian economy was resilient in 2002-03: RBI
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