LSM sees only 1.7 percent growth in first three quarters

The country''''s Large Scale Manufacturing sector witnessed only 1.7 percent growth during the first three quarters of current fiscal year against the target of 4.9 percent. According to the Economic Survey 2010-11, the performance of the manufacturing sector has been a boom bust phenomenon. Some months showed positive growth rate while the rest depicted negative.
Besides, range of factors, three regular features persistently affected the performance of the manufacturing sector: energy crisis, ever-rising input cost and lack of demand. The LSM growth peaked at 12 percent in March 2010 on the back of rising demand of automobile sector and improvement in the textile sector and other engineering products. But since then the growth rate started decelerating due to reduction in cement and steel production.
The abysmal performance was witnessed in November 2010 with LSM growth dropping to 4.6 percent. However, the government expects that the end of year 2010 will see an improved performance in the LSM sector on the back of addition to capacity in fertiliser, steel and increased demand for durables. Despite prevailing energy crisis and weak textile performance, LSM posted growth in December 2010 onwards.
The provisional estimates of industrial investment of gross capital formation in the manufacturing sector registered a decline of 11 per cent in the current fiscal year 2010-11. This decline is due to massive decline in private investment in the manufacturing sector, which decreased by 11.1 per cent. On the other hand public sector capital formation also decreased by 3.5 per cent. The public and private sector investment in LSM declined by 3.5 per cent to 27.2 per cent, respectively.
The entire investment in small scale has come from private sector and has registered a positive growth of 14.6 per cent. Textile industry which contributes 60 per cent to the total export earnings of the country accounts for 46 per cent of the total manufacturing and provide employment to 38 per cent of the manufacturing labour force. The availability of basic raw material for textile industry, cotton, has played key role in the growth of the industry.