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EDITORIAL
 
Promoting industrial growth
9/12/2005
 

          Industries contribute currently about 28 per cent to the gross domestic product (GDP) of the country and this share is a bigger one compared to the one made in the previous decades. But the contribution is still a modest one and needs to much increase in the backdrop of the saturated conditions in the country's traditional and main economic sector, agriculture. Government last year adopted a new industrial policy that aimed -- among other things -- to boost industry's contribution to GDP by 7.0 per cent, to 35 per cent, by the fiscal year 2005-06. But attaining of that target seems highly unlikely now given the present rate of investments in the industrial sector and the various problems faced by it. In this situation, a special committee was formed by the Ministry of Industries to identify the main stumbling blocks to industrial growth . The committee has completed its work and identified the reasons for the less than the desired industrial growth and some of the major ones were reported in this paper on Sunday such as poor law and order, frequent strikes and confrontational politics, lack of necessary land and improper educational system. But the findings are nothing new and have been focused on time and again in the columns of this paper. What is important is an integrated response to these issues from the government involving not only the Ministry of Industries but other ministries as well. The goal should be drawing up a plan, first of all, and then coordinated and focused actions by the ministries to try and achieve an improvement in the situation as a whole.
For example, sufficiency and reliability in the supply of power and gas are considered as very important by industrial entrepreneurs. The Ministry of Energy will need to prioritise projects and coordinate plans and activities in tandem with other relevant ministries to go on increasing energy availability so that present needs are well met and capacities created to cater well to projected future demand. The Home Ministry is presently engaged in efforts to improve the law and order conditions. But it must do so with a vision after consultations with representative bodies of the private sector to get their views on how best to serve their needs. Special measures have been taken by law enforcement bodies to guard business or industrial establishments round the clock and to respond immediately and effectively to any complaint about extortion attempt on any industrialist. Such measures and associated activities can prove to be very helpful in positively motivating industrial entrepreneurs. Supply of trained manpower to feed the changing nature of industries is also a problem. The creation of suitable manpower for industry's requirements is dependent again on the country's educational system. The Education Ministry, therefore, ought to push through projects that can put a pace to the creation of suitable manpower for increasingly meeting industry's requirements. Infrastructures are keys to promoting industrialisation. Government policies can create the inducements among private sector investors to invest in these infrastructures while the government should have a plan to build such infrastructures rapidly on its own. The capacities of existing infrastructures such as ports are very important for industries, specially the export-oriented industries. The government has a special role to play in this area.
Industries grow and thrive not only from conducive environment in respect of the above areas. Industrial growth is also critically linked to the government's fiscal and monetary policies. Industrial entrepreneurs are motivated better if the costs of funds or interest rates on borrowings remain reasonable or low. Taxes and charges should not be also high. Lower import duties on finished goods in contrast with their locally made versions can also create disincentives for the local producers. Thus, fiscal and monetary policies of the government need to help the creation of a level playing field for the local industrial producers.

 

 
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