Page 5 - IACC Newsletter March-April 2014 Issue 03

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From the Secretary General’s Desk
Dear Members,
There are some positive signs in the economic horizon. Foremost is the pick-up of the manufacturing sector as revealed in
the last quarter figures? One would hope that tempo gets going since the critical turnaround of the economy largely
depends on the growth of the manufacturing sector. It is important also to analyze what went wrong in this sector, which
is the most powerful tool for generating gainful employment. During the last few decades or so, the share of
manufacturing to the gross domestic product (GDP) had steadily fallen. It is the avowed objective of the government to
shore up that share to 25 per cent. Several steps were taken and many are in the pipeline to up the share of the sector to
GDP. But they largely belied expectation. Panoply of reasons can be attributed, such as high cost of money, lack of
investment both from within and abroad, lack of adequate aggregate demand etc. This issue needs to be addressed on a
war footing.
The other positive sign is the dramatic turnaround of the current account deficit, which is the difference between the total
outflow and inflow of foreign exchange resources. A few months back, the gap between the two went abysmally high
triggering the fear that a major overhaul of the exchange mechanism has to be carried out. Some short term measures like
import curbs on gold were imposed, with the result that the gold imports have significantly come down. One factor we
should not overlook is the fact that most of the import of gold is for re-export purposes after adding value. The sooner we
lift the curbs the better, since gems and jewelry is a major item in the export basket. Also, we have to recognize the fact
that oil import is a major source of foreign exchange outgo. We have to find ways and means to bring down these imports.
Despite having taken numerous measures to bring down the import bill on account of the oil, India still will have to import
a lion’s share of its requirements. It is also instructive to examine the extent of import compression on account of fall in
import of capital goods. If that is so, it does not augur well for investment in the country.
During this last month IACC organized several meetings across the country on topics related to Financial, SMEs, Education,
CSR and Aviation sectors. For more information on these and our upcoming Events list, I welcome you to read this issue of
the Newsletter.
With regards,
Atul Vyas, Acting Secretary General