Economic Survey 2020 India: The slump in the industrial sector can be largely attributed to the contraction of the manufacturing sector. The declining IIP is also indicating the underlying credit crunch in the Non-Banking Financial Companies (NBFCs) and banks, leading to reduced lending to medium and small industries.
Economic Survey 2020-21 India: Economic Survey 2020 India: Improving the performance of the industrial sector can take India to new heights and achieve Modi’s $5 trillion dollar economy dream. Finance Minister Nirmala Sitharman today presented the Economic Survey 2020 that has suggested to grow the industrial sector for faster growth. The survey underlined that the industrial sector can act as a building block to empower India for unprecedented growth, said a statement by the Ministry of Finance. It also highlighted that the industrial sector performance had contributed in a better way to the GVA in FY19, compared to the previous year. The focus on the industries also becomes important as the sector contributes in creating new jobs on a large scale.
The Narendra Modi-led government has been focussing on its flagship campaign of ‘Make in India’, and now it also showed its intention to ‘Assemble in India’, to couple them and make India a hub of manufacturing and production in the global market.
However, amid a prolonged slowdown, the sector’s performance has shown subdued growth in recent quarters. The GVA of the industrial sector has grown by 1.6 per cent in the first half of the current fiscal year, which is alarmingly lower than 8.2 per cent clocked in the same duration previous year.
The slump in the industrial sector can be largely attributed to the contraction of the manufacturing sector. The declining IIP is also indicating the underlying credit crunch in the Non-Banking Financial Companies (NBFCs) and banks, leading to reduced lending to medium and small industries.
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Capital goods and consumer durables also took blows from the credit crunch in the financial system. Capital goods saw a fall of 11.6 per cent while the consumer durables declined by 6.5 per cent till November in the current fiscal. The downturn in the consumer durables segment has been majorly attributed to a massive slump in the demand from the household sector, especially in the automobile industry.
Meanwhile, amongst the odds, the Gross Capital Formation (GCF) in the industrial sector has registered a rise from – 0.7 per cent in FY17 to 7.6 per cent in FY18, showing an influx of investment in the embattling sector. Mining and quarrying; manufacturing; electricity; gas, water supply and other utility services; and construction had registered a growth rate of 7.1 per cent, 8.0 per cent, 6.1 per cent and 8.4 per cent respectively in FY18.