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Tamil Nadu

Investments should not stop

Special Correspondent

Trade, industry real driving force behind economic growth: Chidambaram

Photo: K. Ananthan

REMEMBERING A PIONEER: Union Finance Minister P. Chidambaram unveils the portrait of former Union Finance Minister R.K. Shanmugham Chetty at the launch of the 80th anniversary celebrations of the Indian Chamber of Commerce and Industry, Coimbatore, on Sunday. –

COIMBATORE: Investments in the industrial sector should not stop as the nation’s economic growth hinges on this sector, though the Government accords top priority to agriculture, Union Finance Minister P. Chidambaram said here on Sunday.

Launching the 80th anniversary celebrations of the Indian Chamber of Commerce and Industry, Coimbatore, he explained that agriculture could, at the most, grow by 4 per cent a year. But, trade and industry were the real driving force behind a fast economic growth. The 4 per cent growth provided by agriculture would not be enough to eliminate poverty, he said, to explain the stress on industrial growth also.

Portrait unveiled

Unveiling the portrait of former Union Finance Minister and first president of the Chamber of Commerce in Coimbatore R.K. Shanmugham Chetty, to mark the launch of the celebrations, Mr. Chidambaram compared the industrial growth and investment position in the southern, western and northern States with those in the central and eastern regions.

All the southern States, barring Kerala, did well. So did Gujarat, Maharashtra, Punjab and Haryana.

But, those in the central and eastern regions did not. Investors were even withdrawing from some areas because of a hostile atmosphere. This should not happen in Tamil Nadu, he said.

Mr. Chidambaram included the service sector in the industry, stating that this also played a key role in economic development. This sector contributed 56 per cent to the Gross Domestic Product, he said. In fact, the service sector grew to that level when the industrial sector’s growth stagnated at one time at 27 per cent when it hit some road blocks in terms of investments.

The fast-paced growth in the early Nineties slumped later. It revived in 2004 and the country had achieved an unexpected growth of 8.9 per cent over four consecutive years. This was owing to the industry and the service sectors.

“I keep explaining the reasons behind the 8.9 per cent growth because some people keep ridiculing it. I have to keep explaining this as long as they continue to ridicule it,” he said. There was a little slump in investments from 9 per cent to 8 per cent, but this was part of a global scenario. India, however, had held on at 8 per cent while Japan and the U.K. had declared a recession. And, Europe was not hopeful of achieving even two per cent this year.

Growth in this area would rise again in India, but more investments were needed. The Finance Minister called for providing a long-term time horizon for investors; to make investments and enable growth to happen. “We have asked the banks to give loans for those who want to invest. At the same time, every trade and industrial association should keep a watch how and where its members invest.

Power generation

The only area of concern was power generation, especially additional capacity. During the last three Five Year Plans, the additional capacity was only 57,000 mw. To address this problem, the current Plan (2007-2012) had set a target of 78,500 mw. China added one lakh mw to its capacity every year because of investments in this area. “We have funds, but our schemes are not being completed,” he said.

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