16 March 2012 16:02 [Source: ICIS news]
KOLKATA (ICIS)--India’s 2012 GDP will rise in the fiscal year beginning in April due to the consolidation of a recovery in sectors such as fertilizer, petrochemicals, cement and electricity, the country’s finance minister said on Friday.
GDP will rise to 7.6% from an estimated 6.9% in the current fiscal year, which ends in March, Pranab Mukherjee said in a budget speech to ?xml:namespace>
“While we do not have aggregate figures for the last quarter of 2011-12, numerous indicators suggest that the economy is turning around.
“There are signs of recovery in fertilizer, petrochemicals, cement and electricity,” Mukherjee said.
“Agriculture and services have been growing at a decent pace. It was industrial production that was decreasing,” he added, describing the current fiscal year’s economic growth, estimated at 6.9%, was disappointing.
There is a “special thrust” on all forms of investment, especially on infrastructure and agriculture to overcome supply constraints which will help manage inflationary pressures and come back to the path of higher growth trajectory, Mukherjee said.
The Union Budget 2012-13 proposed an across-the-board hike in excise duty to 12% from 10% which would increase the prices of chemical and petrochemical products.
The finance minister also proposed exempting imports of liquefied natural gas (LNG), a move that would lower the costs of fertilizer and power producers.
At present, the import of LNG was levied a 5% customs duty.
“The increase in excise rates will definitely be passed on to consumers of chemicals and petrochemical products. But aggregate demand may not be impacted given higher government spending proposed in agriculture and infrastructure,” a trader said.
The budget was also perceived to be positive for the chemicals and fertilizer industries.
“In [the] case of potassic- phosphatic fertilizers, use of single super phosphate (SSP) will be encouraged and since SSP manufacturer is entirely in the domestic sector, increased production would reduce dependency on potassic-phosphatic fertilizers which are import-dependant,” he said.
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