NEW DELHI, INDIA: Indian industry is recovering from the economic slowdown, but the sector has to maintain its cost advantage in the emerging new global industrial order, the pre-Budget Economic Survey said on Thursday.

India's industrial output grew 2.4 per cent in the year to March, compared with 8.5 percent in the previous year, hit by the global slowdown and a decline in domestic demand.

It rose an annual 1.4 per cent in April after contracting three times in four months, the survey said.

It also pointed out that 2007-08 was marked by substantial growth in the revenue of IT-ITeS industry, BPO, software and services exports and software and services employment.

However, the expected growth in 2008-09 is significantly lower when compared to 2007-08.

The economic survey said more than 6,00,000 Indians, many employed in the gems and jewellery sector, lost jobs in just four months from October 2008 owing to the global economic crisis.

About 5,00,000 people lost their jobs in the October- December 2008 period, while over 1,00,000 were shed in January this year. However, a more recent survey by the Labour Bureau for the January-March period showed improvement in the employment scenario in selected sectors, it added.

The survey put IT-BPO sector among the sectors registering increased employment along with gems and jewellery, textiles, handloom-powerloom and automobile.

It observed that India needs to use smart cards to plug leakages in subsidies, especially those aimed at feeding the poor.

The government had last week appointed Nandan Nilekani, former co-chairman of Infosys Technologies Ltd, to head the unique identification project, UID Authority of India.

To bring transparency to the disbursement of funds and prevent leakages, the government needs to have an Internet- accessible public accountability information system for each of its programs, the survey said.

“This system should be accompanied by an integrated smart card system which empowers the citizen to demand approved/budget entitlements as right,” the survey said.

Another observation is that the country's tax system continues to be complex and the survey asked the Government to undertake further reforms, including implementation of a uniform tax structure

"In spite of the improvements made in the tax design and administration over the past few years, the systems at both Central and state levels still remain complex," stated the survey.