Coal to fire core sector growth: Ficci

New Delhi, July 30 | Updated: Jul 31 2006, 05:30am hrs
Coal, electric power, oil & gas, crude oil, steel and aluminium are the major core sector segments projected to record higher growth rate in the current financial year, compared with the growth rate last fiscal.

The higher projection for this year will translate into improved growth prospects for a range of industries in the engineering, non-engineering and the services sectors, according to the latest Core Sector Survey by Federation of Indian Chambers of Commerce and Industry (Ficci).

The survey, based on responses from industry, allied industry organisations, associations, government and PSUs, reveals that the coal sector is projected to grow at 6.5% - 7% in April-March 2006-07, compared with a growth of 6.4% during the corresponding period last fiscal. Likewise, electric power is slated to grow at 5.5% - 6% (against 5.1%); oil & gas 0.8% - 1.4% (-1.4% ); crude oil 0.5% - 1.2% (-5.2%); steel 7%-8% (6.5%) and aluminum 8% - 9% (7.8%).

The survey confirms that in the coming years the core sectors can attain projected growth rates and may even record higher growth than projected, provided some of the basic issues pertaining to each individual sector are addressed.

Some of these issues relate to inverted duty structure, anomalous import tariff, rising prices of basic raw materials with inadequate availability. Inadequate power and power cuts, poor quality of coal and unstable supply have become the major hurdles for user industries in the core sector.

Linkages between supplying coal fields and powerhouses, transportation bottlenecks in case of coal and cement over long distances, continued environmental problems, increase in water cut and increase in water oil ratio in few developing fields and less than anticipated production from enhanced oil recovery projects in the case of oil and gas, high taxes at all levels- center/ state/ local (over 70% of ex-factory price) for cement, higher excise duty on steel and anti-dumping duties on steel are some of the sector specific issues and constraints.