Tunisia’s already modest economic recovery almost halted in 2023, amidst a severe drought, tight financing conditions and the modest pace of implementing reforms. With this slowdown, the Tunisian economy
A high-level allotment committee of the Haryana Government on Wednesday cleared allotment of industrial plots to 51 units in various industrial estates developed by The Haryana State Industrial and Infrastructure Development Corporation. The committee is headed by P.K. Chaudhery, Principal Secretary and Financial Commissioner for Industries and Commerce. Mr. Chaudhery said that these projects when implemented would catalyse an investment of Rs.2,300 crore besides providing direct employment to more than 5,000 people. These plots have been allotted in Growth Centre Bawal Phase II and industrial estates at Barhi and Saha in Sonepat district and Ambala respectively. HSIIDC Managing Director Rajeev Arora disclosed that the allotments had been made in diverse fields .
Acquisition of land for developing special economic zones (SEZs) is a major cause for concern, says the Economic Survey for 2007-08, which was released yesterday by Finance Minister P Chidambaram. The Finance Ministry presents the Economic Survey in Parliament every year, just before the Union Budget. It is the ministry's view on the economic development of the country in the year gone by, and the prospects for the year ahead. The survey has also expressed "apprehension' about the possible "misuse of the (SEZ) scheme and relocation of existing industries into SEZs'. It says the Board of Approval (BoA) headed by Commerce Secretary G K Pillai, which approves SEZ proposals, would not give a go-ahead to SEZs that "have carried out or propose to carry out compulsory acquisition of land
Govt's annual report doubts ability to eliminate revenue deficit. Calling double-digit growth a tough task, the government today cited foreign capital inflow and inflation as the macroeconomic challenge to high sustained growth in its Economic Survey for 2007-08. "If you wish me to sum up in one phrase the outlook for 2008-09, I would say optimism but with caution is the watchword,' Finance Minister P Chidambaram told reporters after presenting the Survey in Parliament. The annual report card on the economy also said the target of bringing the revenue deficit down to zero by 2008-09 would "remain a challenge,' pointing to a step-up in expenditure as the Congress-led United Progressive Alliance prepares for general elections next year. Though bullish on growth, the Survey has sounded an unmistakable note of caution on the capital inflows that the country has seen in the last several months. As these inflows are substantially higher than what the country needs to cover its trade deficit, these funds threaten to raise prices, leading to a tighter monetary policy. This, in turn, is threatening to capital investments in the country. As the sub-prime crisis unfolds in the US and Europe, global investors are likely to be more risk-averse and are, therefore, likely to cut investments in emerging markets like India, the Survey says. However, this could be balanced out by the increased liquidity created by Western Central Banks to deal with the crisis. "On balance, the decline in capital inflows as a proportion of GDP in 2008 is likely to be modest,' the Survey notes. There could be a softening in global commodity prices because of the moderate slowdown in the world economy led by the sub-prime crisis in the US, the Survey says. However, the slowdown could hurt Indian exports, resulting in a modest increase in the country's deficit in trade of goods and services, unless the US slowdown turns into a severe recession, it adds. The Survey also lists radical policy reform options. These include allowing regulated private entry into coal mining, phasing out controls on sugar, fertiliser and drug industries, opening up all retail trade to foreign investment, raising foreign ownership of insurance companies from 26 per cent to 49 per cent (51 per cent for companies operating in the rural sector) and allowing foreign companies to set up fully-owned rural banks. Some of these options like opening retail and insurance sectors have been debated internally by the government in the past. However, opposition from its Communist allies has made it put these proposals on the backburner. The Survey does not mention how actively these options are being considered by the government. However, a finance ministry official told Business Standard that these are the policy reforms that need to be undertaken if the country wants to move to the high growth trajectory. "Hopefully, the inputs will be picked and debated for implementation. These are suggestions and not recommendations,' the official said. In addition, the Survey calls for amending the Factories Act that would allow companies to meet seasonal ups and downs in demand and new bankruptcy laws to facilitate the exit of old management as expeditiously as possible. It also lists an ambitious disinvestment programme of listing all closely-held public sector companies and auctioning all loss-making units that cannot be revived. For the first three years of its rule (2004-07), the government kept its word to the Left parties and did no disinvestment at all. It was only earlier this year that it decided to list all its power utilities.
Any Budget can be evaluated on a number of criteria. Here, briefly, is a check-list of benchmarks by which today's pronouncements can be scored. First, from the perspective of the finance ministry's own domain, we need to look at what it does on the fiscal front. Mr Chidambaram has shown complete commitment to the mandate of the Fiscal Responsibility and Budget Management (FRBM) Act, to cap the fiscal deficit while eliminating the revenue deficit. The latter is the greater challenge and his convergence towards the zero-deficit target will be a significant yardstick. Beyond the aggregate numbers, he has also indicated his commitment to taking the country to a full-fledged Goods and Services Tax (GST), which will involve a series of rate rationalisations and re-balancing as far as indirect taxes are concerned. These should be watched out for. Second, broadening the scope of evaluation to macro-economic performance, the Budget must be seen in terms of what it does to sustain rapid economic growth, especially in the context of the global as well as Indian slowdown that has set in. To deal with the cyclical effects, he needs to pump money into programmes that will quickly spend it, thus achieving pump-priming. Critical to longer-term growth is the stepping up of investment in infrastructure, not just in terms of financial commitments but also in creating effective vehicles for implementation in the public and private sectors. Even with all the good intentions of the government in play, the infrastructure gap is not narrowing. Third, the ruling coalition's emphasis on inclusive growth is beyond being a political slogan; inclusiveness is a critical component of a sustainable growth path. This needs to be tackled at several levels. Transfer payments to provide households a secure and minimum level of subsistence need to be combined with longer-term programmes that build capabilities and earning capacity. The Economic Survey has shown that, despite doubling social sector spending over the past four years, the country's position vis-
Favours partial sale of profit-making non-navaratna PSUs, and tackling of inflationary impulses Holding out a warning that the current slowdown in the U.S. would have an effect on the Indian economy, the Economic Survey 2007-08 maintained that sustaining a high GDP growth of nine per cent while reining in inflation would be a tough challenge. Tabled in Parliament by Finance Minister P. Chidambaram on Thursday, the Government's pre-Budget annual economic progress report said that in the current uncertain scenario, an increase in the overall growth to double digits would entail additional reforms and came out with a policy prescription. Among the various measures suggested to sustain the high growth momentum, the Survey favoured partial sale of the identified profit-making non-navaratna public sector undertakings (PSUs), phasing out control on sugar, fertilizer and drugs, sale of old oilfields to the private sector, a higher share for foreign equity in retail trade and further opening up of the banking and insurance sectors to foreign direct investment (FDI). With the economy projected to grow at 8.7 per cent during the current fiscal, the Survey pointed out that the lower growth represented a deceleration from the unexpectedly high growth of 9.4 and 9.6 per cent in the preceding two years. "Maintaining growth rate at nine per cent will be a challenge and raising it to two digits will be an even greater one,' the Survey said. Linking the huge accumulation of foreign capital inflows as the reason for the pressure building up on prices, the Survey said that inflationary impulses from global commodity prices must be tackled through use of fiscal and trade policy instruments. Inflation this fiscal is projected to return to the earlier level of 4.4 per cent, down from 5.4 per cent in 2006-07. Deceleration in growth this fiscal appears to have spread across all sectors except electricity, community service and services such as trade, hotels, transport and communications. More significantly, the slowdown in the farm sector growth is attributed to the sluggish trend witnessed in rabi crops. Also, other sectors like manufacturing and construction which grew at 12 per cent in 2006-07 dropped by 2.5 percentage points in the current year. "The slower growth of consumer durables was the most important factor in the slowdown of manufacturing,' the Survey said. As for the external sector, the U.S. economy is expected to slow down in 2008 as a fall-out of the sub-prime mortgage crisis. In fact, most projections of global economies anticipate a moderate and not severe slowdown. "This will impact all countries including India, depending on the importance of the slowdown in different countries and importance of the country in our exports,' the Survey concluded, while pointing out that a further fall in exports to the U.S. might be unavoidable but would be relatively modest. On the flip side, the Survey viewed that one of the implications of the U.S. sub-prime crises would be increased capital inflows into India and other emerging markets. "Thus the situation of excess inflows is likely to remain, though the pressure on reserve accumulation and exchange rate appreciation is likely to ease. Any reduction in excess capital flows from the high levels in 2007 may affect the equity markets in the short-term, but will make the task of monetary management easier,' it said.
The central theme of Economic Survey 2007-08 is maintaining the strong economic growth momentum of the recent period. With the annual GDP growth exceeding 8 per cent since 2003-04, the economy has moved decisively to a higher trajectory. The official forecast of 8.7 per cent for 2007-08 accords with this trend. But the figure suggests a slight deceleration, considering that the first six months of the year recorded a growth of 9 per cent or more. For 2008-09, most official forecasts have pegged the rate at 8.5 per cent or less. The key task is to regain the upward push so that the economy averages a 9 per cent or even higher growth towards the end of the 11th Plan. There are both positive and negative factors that would shape the near-term outlook. Macroeconomic fundamentals continue to inspire confidence. A sharp acceleration in the domestic investment and savings rates has sustained the high growth. Buoyant tax revenues have helped in fiscal consolidation so far. The budget will show if the government's finances are on track to meet the goals set under the Fiscal Responsibility and Budget Management Act. Inflation however remains a major worry. Over the past year global factors, notably the high prices of oil, food and other commodities as also the turmoil in financial markets have clouded the external environment. Appreciation of the rupee and a slowdown in specific segments of industry as well as in infrastructure are some of the other major areas of concern. For sustaining economic growth at high levels, policy makers are up against several challenges. Additional reforms are obviously needed. Capital inflows, especially those relating to direct investment, are expected to continue in the medium-term. Combating inflation has become more complex in the context of recent structural changes in the economy and its increasing globalisation. Among the important factors to be reckoned with are the high tariffs on agricultural products, the large share of food in the consumption basket, and the slow modernisation of agriculture and allied activities. Inadequate availability of infrastructure continues to be a major constraint on the supply side. Highlighting the need to improve social sector and human development outcomes at the level of the States, the Survey lays stress on improved delivery mechanisms for the success of programmes such as the NREGP and Bharat Nirman. In a departure from the past, Survey 2007-08 has sought to provide a more rigorous analysis and a conceptual framework, and has added a new chapter that covers subjects of topical interest. That along with the proposal to release background papers will help in disseminating timely economic information to a larger audience.
Union Finance Minister P. Chidambaram after presenting the Economic Survey 2007-08 in Parliament on Thursday. With the country's economic fundamentals strong and investment climate full of optimism, Finance Minister P. Chidambaram on Thursday exuded confidence on achieving an average GDP growth of nine per cent during the Eleventh Plan period (2007-08 to 2011-12) while reining in inflation alongside. As for the outlook for 2008-09, Mr. Chidambaram said: "Optimism, but with caution, is the watchword' while commenting on the policy prescriptions of the Economic Survey 2007-08 which projected a lower GDP growth of 8.7 per cent for the current fiscal and, in that light, viewed sustenance of a high growth as a daunting task. Speaking to newspersons immediately after tabling the Survey in Parliament, Mr. Chidambaram pointed out that the country was required to respond to the evolving global economic situation so as to ensure that its growth was not affected and this, he said, could be achieved by capitalising on the opportunity arising from the "favourable' conditions. "I am optimistic about growth and containment of inflation in the coming year [2008-09],' he said, while noting that his priority was to provide a conducive investment climate and manage the macro economy to facilitate non-inflationary growth. Reading out from a prepared statement which was later released to the press, Mr. Chidambaram said: "Keeping inflation under control in an uncertain global environment will be one of the major challenges in 2008-09.' He noted that the current slowdown and possible recession in the global economy posed risks to growth. On the rise in domestic savings and investment, the Finance Minister said: "We are confident of meeting the 11th Plan target of 9 per cent average growth.' The high GDP growth, he said, had benefited the common man as well, as this was reflected by a near doubling of the annual growth rate of per capita consumption to 5.1 per cent in 2007-08 compared to 2.6 per cent for the previous 11 years. "If the rate of growth of per capita GDP continues at the five-year average of 7.2 per cent per year, the average income would now double in a decade instead of a generation or more, earlier,' he said. Expressing concern over the slow pace of growth in the farm sector and bottlenecks in infrastructure development, he stressed the need for mobilising public and private resources for "inclusive' growth. In a note of confidence, the Finance Minister said: "I am optimistic about growth and containment of inflation in the coming year. It will be my priority to continue to provide a conducive investment climate and manage the macro economy to facilitate non-inflationary growth. We have to ensure that the benefits of this growth percolate to the most marginal and vulnerable segments of society.'
Not only is the United Progressive Alliance far from delivering on its National Common Minimum Programme (NCMP) promise of allocating six per cent of the Gross Domestic Product to education but the allocation also dipped in percentage terms in 2007-08 compared to the preceding year. According to the Economic Survey 2007-08, the Budget Estimates of the expenditure on education stood at 2.84 per cent of the GDP in the current fiscal. In 2006-07, the expenditure as per the Revised Estimates was 2.88 per cent. Though the expenditure on education as a percentage of the GDP in the past two years was higher than the first two years of the UPA rule, it still falls short of the 2.9 per cent achieved in 2002-03 during the National Democratic Alliance regime. In the NCMP, the UPA pledged to raise public spending on education to at least six per cent of the GDP in a phased manner. Starting lower than 2.74 per cent of the GDP in the last year of NDA rule (2003-04), the allocation in 2004-05 was 2.67 per cent. Though it went up to 2.69 in 2005-06 and stood at 2.88 per cent in the Revised Estimates for 2006-07, the allocation is still below the halfway mark of the promised target. Last year the Planning Commission, in fact, said India could hope to achieve the target
While pointing out that the overall performance of the infrastructure sector of late has been
India's growth is unlikely to slip below the 9% rate in the next few years, says the finance ministry's Economic Survey, but the downside risks have become stronger this year. Among those risks are the international subprime crisis and a slackening of growth in agriculture and manufacturing within the country. The other is the political opposition, because of which the Survey tabled in Parliament by finance minister P Chidambaram on Thursday has had to tuck away its 12-point list of reforms in a box, outside the main narrative. The more significant of these reforms are in the financial sector: allowing the public float of at least 10% in all public sector units, permitting FDI in retail, raising the FDI cap in insurance, besides 100% foreign investment in greenfield rural agricultural banks. The Survey says if the current growth trend persists "
