The Hindu : Karnataka / Bangalore News : ‘Only better growth can revive the economy’

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Saturday, Jun 27, 2009
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Karnataka

Karnataka - Bangalore

‘Only better growth can revive the economy’

Special Correspondent

BANGALORE: Better growth in the manufacturing sector is essential for the revival and growth of India’s economy, Director, IIM Bangalore, Pankaj Chandra, said here on Friday.

Addressing the 92nd Annual General Meeting of Federation of Karnataka Chambers of Commerce and Industry (FKCCI), Prof. Chandra said: “The services sector alone cannot improve growth. At least 25 per cent of the GDP has to come from the manufacturing sector to achieve a consistent 9 to 10 per cent growth.”

Detailing reasons for holding back the manufacturing industry, he said although they began investing in quality control from the late 1990s, there was less attempt to control costs; one reason was lower scales.

Many companies spent little on skills training and most were reluctant to hire qualified persons.

Although smaller enterprises were likely to be more flexible, this did not happen because most small industries wanted to become ancillary suppliers to big industries and had no reason to innovate.

Only the mid-sized industries fared better on these counts.

Prof. Chandra expressed the view that India’s domestic economy was relatively unscathed because “traditional spending” on products and services as on occasions such as weddings.

Growth

FKCCI outgoing president D. Muralidhar said in 2008-09 Karnataka’s industrial sector grew 5.8 per cent against the national average of 4.8 per cent.

Rain-dependent

But this year inadequate rainfall could bring down agricultural production to a negative growth of 5.7 per cent and this may bring down Gross State Domestic Product to 5.5 per cent, lower than the country’s growth of 6.7 per cent. Federation of Karnataka Chambers of Commerce and Industry president-elect J. Crasta was introduced to the members.

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