Q: As you say, 8-9% growth is dependent upon the global economy improving. To what extent is it also dependent upon our own manufacturing growth rate improving? During the last quarter of the last year, manufacturing actually dipped into negative, it was -1.4%. Overall for the year that has ended, it is just been about 2.5% compared to a much healthier 9%. So, are you worried that our manufacturing sector seems to have become a bit of a laggard?

A: The manufacturing sector is not growing in the way it should be growing. I think the overall growth rate of industrial production, even if it is positive, is very low. Therefore, we really need to get to a situation in which the overall industrial production and more particularly manufacturing, picks up.

But the pick up in manufacturing is also dependent upon the external sector because there are many components of the manufacturing sector in which the external demand plays a very significant role. Take for example, automobile components. In the case of automobile components, the external demand plays a very strong role and as the exports do not pick up and as exports show a negative growth rate, then that segment of the manufacturing sector will also be affected.

Therefore my statement that for the manufacturing and the industrial production sector to pick up to a considerable extent, the external sector of the economy, the global economy needs to improve and it is dependent upon the way in which the global economy behaves.

Q: I take on board the linkages your making between the external sector and our own domestic manufacturing sector - what about our agriculture sector? It may only account for something like 17-18% of GDP growth but 66% to 70% of our population live and our directly or indirectly affected by the agricultural sector. Now agricultural growth last year was down to just 1.6% compared to a much more robust 4.9% the year before and now on top of everything else we have a delayed and a deficient monsoon and we still aren’t sure just how much of that deficiency will be made up. Are you worried about the agricultural side of the economy?

A: As you rightly point out the agriculture today contributes only about 17-18% of the GDP therefore in terms of the overall growth rate the performance of agriculture does not have as much impact as it used to be. However the growth rate in agriculture is important for other reasons. It is important for the point of view of food security. It is important for the point of view of ensuring adequate level of employment in the economy. It is also important for the point of view of poverty reduction. Therefore taking all these factors into account even though it contributes less than 20% to the GDP we need to pay adequate attention to the growth rate in agriculture and therefore I would be concerned if the growth rate in agriculture slackens. Of course a good monsoon would considerably improve the agricultural prospects. We still can hope to have a near normal monsoon in this current year but except for last year the years preceding that we had a considerably strong growth in agriculture and I think we need to repeat that performance in the current year and in the next few years but if the monsoon plays truant then I think we have a serious problem and I am concerned for that reason.

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