Medium term industrial outlook positive: Economic Survey

New Delhi, Feb 28 (UNI) The Economic Survey 2007-08 forecasts a 'positive outlook' in the medium term for the industrial sector, riding on the strong performance of the capital goods, notwithstanding a slow down in the first nine months of the current fiscal.

The Survey, tabled by Finance Minister P Chidambaram in Parliament today, refers to the copious investments flowing in--both domestic and foreign-- as a result of the liberalised investment regime.

''There are a number of positive developments that brighten the industrial outlook in the medium term,'' the Survey said.

It added there has been a commendable growth in the capital goods sector, especially in industrial machinery, which, along with strong imports of capital goods, augurs well for the much required industrial capacity addition.

''The inherent strength of industrial corporates, manifested in the increase in profits and profitability and strong investment plans, confirms the strength of the growth prospects in the medium term,'' the Survey said.

The high investment plans made for infrastructure during the Eleventh Plan are expected to gradually alleviate the infrastructural constraints to industrial development, it pointed out.

''Moreover, the burgeoning direct investment inflows in the liberalised investment regime supplements the domestic investment to a great extend,'' the Survey said.

However, the Survey added that the real challenge lies in the strengthening the foundation for sustained industrial growth.

''One of the biggest challenges to sustaining and stepping up itdustrial growth lies in removing the infrastructure impediments in road--both rural and urban--rail, air and sea transport and power,'' it said.

The Survey said that infrastructure growth not only alleviates the supply side constraints in industrial production, but also stimulates additional domestic demand required for industrial growth.

''Another issue in industrial growth is the swiftness and efficacy with which the skill deficit felt in many areas of manufacturing is bridged,'' the Survey said.

This will facilitate research and development and technological innovations, which are urgently called for in important industries like chemicals, automotives and pharmaceuticals, it added.

Further, the Survey said there is an imperative need to facilitate the growth of labour intensive industries, especially by reviewing labour laws and labour market regulations.

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