For industrial growth
Sunday, 28 September 2008
Mozzamel Haque
The government adopted, three years ago, a new industrial policy to boost industry's contribution to GDP by 7.0 per cent, to 35 per cent, by fiscal 2005-6. Attainment of the target proved impossible given the current rate of investment and the various problems faced by the industrial sector.
In this backdrop, a number of bodies, including the one set up try the concerned ministry identified the reasons for the less than the desired industrial growth. Some of the major reasons that were identified in this connection were reported by newspapers. An integrated response to these issues is needed from the government, not only from the Ministry of Industries but other ministries as well. The goal requires a plan, followed by coordinated and focused actions by the ministries to improve the performance of the industrial sector.
For example, sufficient and reliable supply of power and gas is a very important prerequisite for better industrial performance. The energy ministry needs to prioritise projects for coordinated action with other relevant ministries to go on increasing energy supply to meet the growing needs.
The home ministry needs to improve the law and order situation in consultation with the chamber bodies to best serve the productive interests. The law enforcement agencies must guard business or industrial establishments round the clock and quickly respond to complaints against extortion attempts on industrialists or disruptive acts against industries. This would positively motivate the entrepreneurs.
Trained manpower availability for the changing nature of industry, dependent on the country's educational system, is a problem. The education ministry, therefore, ought to push through suitable human resource development projects to meet the industry's growing and diverse requirements.
The government policies need to induce the private sector to invest in infrastructure, a key factor for rapid industrialisation. Besides, the government should rapidly develop infrastructure. The capacity of ports and other infrastructure are very important for industries, specially the export-oriented sectors. Government must be alive to its special role in the area.
Industrial growth is also critically dependant on government's fiscal and monetary policies. Entrepreneurs can be motivated to invest if the costs of funds or lending rates remain reasonable or low. Heavy or harsh taxes and charges discourage industrial operators. An incongruous duty structure that facilitates marketing of imported products is bound to discourage domestic production. In other words, it creates disincentives for the domestic manufacturers. Therefore, the government's fiscal and monetary policies need to encourage local industrial producers.
The government adopted, three years ago, a new industrial policy to boost industry's contribution to GDP by 7.0 per cent, to 35 per cent, by fiscal 2005-6. Attainment of the target proved impossible given the current rate of investment and the various problems faced by the industrial sector.
In this backdrop, a number of bodies, including the one set up try the concerned ministry identified the reasons for the less than the desired industrial growth. Some of the major reasons that were identified in this connection were reported by newspapers. An integrated response to these issues is needed from the government, not only from the Ministry of Industries but other ministries as well. The goal requires a plan, followed by coordinated and focused actions by the ministries to improve the performance of the industrial sector.
For example, sufficient and reliable supply of power and gas is a very important prerequisite for better industrial performance. The energy ministry needs to prioritise projects for coordinated action with other relevant ministries to go on increasing energy supply to meet the growing needs.
The home ministry needs to improve the law and order situation in consultation with the chamber bodies to best serve the productive interests. The law enforcement agencies must guard business or industrial establishments round the clock and quickly respond to complaints against extortion attempts on industrialists or disruptive acts against industries. This would positively motivate the entrepreneurs.
Trained manpower availability for the changing nature of industry, dependent on the country's educational system, is a problem. The education ministry, therefore, ought to push through suitable human resource development projects to meet the industry's growing and diverse requirements.
The government policies need to induce the private sector to invest in infrastructure, a key factor for rapid industrialisation. Besides, the government should rapidly develop infrastructure. The capacity of ports and other infrastructure are very important for industries, specially the export-oriented sectors. Government must be alive to its special role in the area.
Industrial growth is also critically dependant on government's fiscal and monetary policies. Entrepreneurs can be motivated to invest if the costs of funds or lending rates remain reasonable or low. Heavy or harsh taxes and charges discourage industrial operators. An incongruous duty structure that facilitates marketing of imported products is bound to discourage domestic production. In other words, it creates disincentives for the domestic manufacturers. Therefore, the government's fiscal and monetary policies need to encourage local industrial producers.