The Hindu : Business : Inflation an area of concern, says Munjal

Online edition of India's National Newspaper
Saturday, Jul 31, 2004

Business

Business

Inflation an area of concern, says Munjal

By R. Gopalakrishnan

— Photo: K. Pichumani

The President of the Confederation of Indian Industry, Sunil Kant Munjal, with the Chairperson, CII-Southern Region, Shobana Kamineni, at the Meet the Press in Chennai on Friday.

CHENNAI, JULY 30. The emerging situation in respect of inflation is an area of concern, according to Sunil Kant Munjal, the newly-elected President of the Confederation of Indian Industry (CII).

"Inflation will happen this year, and its extent will be known in the next few weeks with the progress of the monsoon", Mr. Munjal said, addressing the media here today. He felt that reducing the "cost of running the government" was one of the areas in which action would be needed to counter inflation.

In his presentation on "Development and growth — issues and challenges", Mr. Munjal said the CII expected "at the highest" a growth of only 2 per cent in the farm sector this year, given the high growth last year on a very low base figure of 2002-03. If the monsoon continued to be unsatisfactory, it expected nil growth in the farm sector and only 6.6 per cent in the overall gross domestic product growth. However, the fact remained that India, along with China, represented the fastest growing regions of the world. The nation should aim at a decadal annual growth rate of 8 per cent to double the per capita income (now at $470). This was possible, as India had entered a "virtuous growth cycle", as had earlier been done by South Korea, Singapore and China.

CII agenda

On top of the CII's agenda was the rural economy, with emphasis on housing, developing a farm policy based on private-public partnership (PPP), incentivising corporate involvement in farm production and processing and ensuring rural connectivity to help marketing of farm produce. Six new task forces being set up by the CII included two devoted to rural economy and water (the others being education, health, energy and tourism). Given the fact that India would have a predominantly a young population in the next few decades, there was no alternative to reviving the manufacturing sector and increasing the growth rate in service sectors to provide employment. Mr. Munjal called for adoption of the Small Enterprises Development Bill, which would address many issues plaguing the small sector.

The CII would offer "cluster consultancy" to small and medium enterprises in the areas of quality, information technology, competitiveness and energy, help improve SME's access to design and technology, showcase SME strengths abroad and offer advisory services to SMEs on government regulations. Other new services to be offered by the CII included "condition monitoring" of power equipment, advisory services on logistics and green buildings and technology support for micro-enterprises. The new CII office in Geneva would service Indian industry on WTO issues.

Free Trade Agreements

Mr. Munjal said the CII was all in favour of free trade agreements and was working with the government closely on FTAs. It was natural to seek reviews of agreements, but what should be remembered was that the agreements opened up markets.

N. Srinivasan, CII Director-General, said the industry needed a level playing field in respect of customs duties and acceleration of domestic tax reform in the context of FTAs.

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