What do the industrialists think of the Indian economy and what steps do they think the government needs to take to tackle the challenge the country faces? That is the key issue Karan Thapar took up with one of India's top industrialists, Sunil Mittal on Devil's Advocate.

Here is a verbatim transcript of the exclusive interview with Sunil Mittal on CNBC-TV18. Also see the accompanying video.

Q: Mr Mittal, let's start with the state of the economy. On the one hand we had better than expected fourth quarter results and the economy as a whole during the last year has grown by something like 6.7 per cent. But on the other hand, exports have steadily fallen for seven months in a row, manufacturing growth is just 2.5%compared to 9% the year before and maybe we have lost something like 15 or 20 lakh jobs. So what is your considered assessment of the economy?

A: As you rightly point out, it is a mixed bag but I would say more on the positive side rather than negative. The world has gone through hell. We all know where the US is, the Western economies are. We all travel and see the pain of it all around. If we compare ourselves to the rest of the world, I think we are in great shape. A 6.7%for a trillion-dollar economy is no mean achievement.

Q: So you agree with the view of Mr Tendulkar, who is the head of the Prime Minister's economic advisory counsel that the economy is a) reviving and b) we will begin to see healthy growth in the second or third quarter of this year.

A: I would say a cautious yes. There is an air of expectation all around with the new Government having taken position. People have great expectations from the upcoming Budget. The manifesto of the Congress party and the UPA clearly suggest that formidable steps will be taken by the Government to take care of all stakeholders of the society.

Q: Let's focus on manufacturing. Not only is manufacturing growth down to just 2.5% compared to a much healthier 9%, but in the fourth quarter it was actually negative. As a former chairman of CII, how worried are you by the state of Indian manufacturing?

A: Manufacturing has been a cause of concern for a couple of decades now. India has seen the manufacturing coming down year after year. In the last four or five years, we saw stabilisation and then recovery of the manufacturing sector. The last one year has been a blip again, but do remember that prior to last year, the four or five years have been robust years of manufacturing growth. Even now there are pockets which are doing very well. Take the special example of automobiles – some companies have grown tremendously even in the last year.

Q: But you do accept that manufacturing as a whole has become a problem for the Indian economy.

A: I wouldn't say it's a problem but it has gone into a consolidation phase where the growth has been limited in most of the manufacturing sectors. Real estate has shrunk, the infrastructure slowed down, therefore steel, cement and by virtue their associated sectors, not to forget exports, did suffer on account of the world economy slowing down.

Q: You also have a venture with Wal-Mart, which means you have a great interest in agriculture and the agricultural growth this year is just 1.6% compared to a far more robust 4.9% the year before. Is agriculture a problem area or should agriculture be seen in terms of cycles and in four-year ranges rather than one year at a time?

A: If you just go two quarters back, agriculture was looking good. We were all very happy that agriculture had started to contribute to the economy but given that 60% of India's population is reliant on agriculture and the share of the GDP pie for agriculture is only 17%, there is a skew. If agriculture starts kicking in, it will take care of a lot of pressure that the government faces in the rural areas. It has slowed down but we have seen slower growths in agriculture in the past. So I am not pessimistic about agriculture. Technology, injection of infrastructure to rural areas should hopefully do some magic there.

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