A careful listener of the annual Union Budget speech(and related commentary/analysis) would hear the term 'priority sector' used(overused?) ad-nauseum, in the context of tax relief, subsidies, soft loans etc. Some known sectors are textiles, agriculture, renewable energy, gems etc. While the rationale for some of these are political like for sugar(powerful barons in Maharashtra/UP) or wheat(powerful farmers in Punjab/Haryana), the reality is that some are prompted by quite logical considerations. The National Manufacturing Policy of Oct-11(http://dipp.nic.in/English/Policies/National_Manufacturing_Policy_25October2011.pdf) gives an interesting analysis of priority sector, in the context of proposing sector specific interventions. To quote from Section 7 of that document,The priority sectors as identified in the Planning Commission and NMCC papers are:-
a) Employment intensive industries like textiles and garments; leather and
footwear; gems and jewellery; and food processing.
b) Capital goods like machine tools; heavy electronic equipment; heavy transport, earth moving and mining equipment; high technology equipment like telecom, power, ICT and electronic hardware.
c) Strategic industries like aerospace; shipping; IT and electronic hardware;
renewable energy; solar, wind etc; defence equipment.
d) Industries where India enjoys a comparative advantage like automotive; pharmaceuticals.
While the socialist legacy of India politics would explain (a), (b) & (c), the post liberalization budgets have slowly begun to push sectors where India has a comparative advantage viz (d). One would like to believe that the above sectors are favoured for logical reasons, and not just for crony capitalism. Hence, the purpose of this post to try giving some credit to the Govt.
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