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Industrial revival may sustain: NCAER

By Our Special Correspondent

NEW DELHI APRIL 17 . The National Council of Applied Economic Research (NCAER) has projected that the industrial revival now underway would be sustainable, though to what extents it accelerates in the coming months would depend on the revival of investment activity in the economy.

In its review of the economy, the NCAER has said the overall real GDP was projected to grow at 5.6 per cent in case investment did not get adversely affected.

In case investment did not pick up and global GDP was lower than expected, the domestic economy was likely to grow between 5 per cent and 5.2 per cent.

The impetus provided in the 2003-04 budget to sectors such as construction, railways, health and tourism also add to the positive industrial outlook, the council has said.

However, the worrying factor was non-revival of investment spending, which is the key to a sustained industrial turnaround. In fact, the downturn in investment in plant and machinery, which began in the mid-1990s, still continues and, for the first time since 1977-78, the investment rate fell below the savings rate in 2001-02.

After recording a growth of 4.3 and 6.4 per cent in the first and second quarters of 2002-03, the industrial sector again clocked a growth of 5.5 per cent in the third quarter on a year-on-year basis.

This buoyancy was also noticeable in the latest round of Business Expectations Survey of NCAER. It shows that the Business Confidence Index (BCI), which in October 2002 had remained virtually unchanged from its level in June 2002, jumped by an impressive 12.4 per cent in the month of January 2003 as compared to October 2002.

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