Core Sector in 2014

Prudent finances at the Centre will help rev up growth of the Core Sector which has only 38 percent weight in the index of Industrial Production.

2014 was a better year as compared to 2013 in terms of growth volumes recorded in the core sector. The growth figure of 6.7 percent came at a price of stretched government finances and a sky-rocketing fiscal deficit which reached 99% of the amount budgeted for the year.

The government has to increase the tax and non-tax revenue and also rationalise expenditure to contain fiscal deficit to an amount of 4.1 percent of the GDP. This has to be accompanied proactive growth policies to sustain growth momentum.

The improvement in the core sector came from oil products, cement and power productivity. Although coal output was buoyant but the cancelled coal-block auctions need a comprehensive policy overhaul for a systematic recovery. Furthermore what are required are rationalisation and comprehensive reforms in fertiliser sector which will give a philip to production. Even the steel industry needs a boost in investment demand which should involve capital goods. Likewise, a sound policy framework has to be prepared to boost productivity of crude oil and natural gas.

Thus, there has to be a general revival of demand and government has to step up divestment in public sector to increase revenue and boost investor sentiment.