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Flagging Industrial Growth

INDICATIONS are that the impressive industrial growth of the past two years will not be sustained in the current year. After touching an annual rate of 8.4 per cent in the five years before the initiation of the so-called economic reforms, industrial growth had suffered a setback in the following three years from 1991-92 to 1993-94 when the index of industrial production (base: 1980-81 = 100) rose by 0.6 percent, 2.3 per cent and 6 per cent, respectively. In the next two years, however, there was a smart recovery to 9.4 per cent in 1994-95 and 12.1 percent in 1995-96. Though the growth of industrial production in these two years was fairly broad- based, the scctorwise performance was mixed. The infrastructure sector comprising mining and quarrying and electricity registered relatively moderate increases of 7 percent and 8 per cent, whereas manufacturing achieved a growth of 9.8 percent in 1994-95 and 13.7 percent in 1995-96. As per the use-based classification, the outstanding performers were capital goods (24.8 and 19.4 per cent) and consumer durables (10.2 and 38.5 per cent), though in both cases the growth in these two years, to a large extent, only made up for the poor performance in the first two or three years of the reforms. In 199596 the index for capital goods industries was 31.1 per cent higher than five years ago in 1990-91, whereas in the preceding five years the rise had been by as much as 107 per cent. Similarly, the growth of consumer durables in the last five years works out to 56.8 per cent compared to 77.3 per cent in the preceding five years. The general index too shows a rise of only 33.6 per cent in the last five years compared with 49.6 per cent in the previous five years. The government's claims that the reforms have given a decisive boost to industrial growth arc thus clearly unwarranted, especially considering the signs already visible of a deceleration of industrial production this year.

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