Govt to watch risk factors to growth: FM

Published: Thursday, July 6, 2006, 17:02 [IST]

New Delhi, July 5 (UNI) Finance Minister P Chidambaram today said that while the performance of the Indian economy was impressive and fundamentals remained strong, the government will keep a close watch on the risk factors so that the growth momentum was not stalled.

''We have reason to feel a sense of satisfaction when we look at the performance of the Indian economy-- our macroeconomic fundamentals continue to be strong and there are reasons to believe that robust economic growth will continue,'' Mr Chidambaram said addressing the Interactive Session with Industry held here.

The Finance Minister had a meeting with Industry Associations on increasing the industrial growth rate. Representatives from ASSOCHAM, CII, FICCI and PHD Chamber of Commerce and Industry took part in the session.

Minister of State for Finance Pawan Kumar Bansal and Senior Officers of the Ministry were also present at the session.

Mr Chidambaram said industrial growth in the first four years of the Tenth Plan (2002-2006) averaged 7.3 per cent. The key sectors driving this growth were chemicals, machinery and equipments, transport and auto parts, basic metals, non-metallic mineral products, particularly cement; beverages and tobacco products and apparels.

The Finance Minister said relative to these sectors, textiles, leather, wood products, food processing and metal products in the manufacturing sector and the mining and electricity sectors performed poorly.

''Capital goods, generally taken as an investment indicator in the economy, consistently performed better than the overall average growth. The average growth posted by this sector since June 2002 has been around 14 per cent. Consumer goods, both durables and non-durables, also remained buoyant and grew at around 12 per cent in the last two years,'' he said.

Mr Chidambaram was of the view that good performance in these two segments - capital goods and consumer goods - suggests that consumption-led growth was generally balanced by strong investment-led sources of growth.

The Finance Minister found it encouraging that nearly 40 per cent of the manufactured output continued to be exported. This was an indication that buoyant global demand and improved competitiveness of Indian manufacturing have had their fair share in GDP growth.

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