By Anand Krishnamoorthy, Bloomberg
NEW DELHI: India, the world’s second-fastest growing major economy, can attain 10 %industrial growth rate in the next five years as automobile production and electricity generation increase.
India’s Planning Commission has set a target of 10 % industrial growth rate for the five fiscal years beginning 1 April and that is “eminently achievable,” the government said in the Economic Survey for the fiscal year ending 31 March. Industry has grown 10.6 % so far this fiscal year, the fastest pace since 1996, the survey said.
Companies, including General Motors Corp. and Reliance Industries Ltd., are producing more cars and oil products in Asia’s fourth-largest economy as record bank lending and higher salaries spur consumer spending. The pace hinges on the country removing infrastructure impediments such as power generation, the survey said.
“Capacity addition through investment is critical for accelerating growth in industry,” the survey said. “The investment scenario looks quite optimistic, particularly with rising domestic savings rates and foreign direct investment flows.”
India’s industrial growth has been rising on the back of higher manufacturing of cars, washing machines and motorcycles. Demand for durable goods is rising with economic expansion and easier availability of credit.
The nation’s industrial growth in the five years ending 31 March will be 8.7 %, lower than the 10 % target, the survey said.
Infrastructure upgrades, an enabling fiscal infrastructure and enhanced accessibility to credit are some “crucial policy aspects which need to be addressed immediately to ensure that the targets are met,” the survey said.