India Inc disappointed over poor IIP show; wants rate cut
New Delhi: Expressing disappointment over decline in industrial production in April, India Inc on Wednesday pressed for rate cut by RBI to boost output and revive economic growth, besides speedy clearance of projects.
Industry chamber Ficci said the RBI should intervene and cut interest rates. "Consumer durables segment registered one of its highest falls since 2009 and calls for moderation in interest rates to stimulate demand," Ficci President Naina Lal Kidwai said.
Also, she added, overall the investment sentiments remain subdued in manufacturing and infrastructure.
"Unless we see speedy implementation of projects stuck due to inter-ministerial clearances, industrial growth is likely to remain moderate," she said.
Sharing similar views, CII Director General Chandrajit Banerjee said: "We are looking forward to an accommodative monetary policy announcement on June 17 to stimulate investments."
India Inc has been demanding a rate cut to promote growth which fell to decade's low of 5 percent in 2012-13. The economic growth was 6.2 percent in 2011-12.
CII said while IIP has shown some signs of improvement, the growth triggers which would pave the way for a sustained recovery have yet to become apparent.
What is also worrisome is that the consumer durables sector continues to be in the red as high interest rate is pulling down demand, it said.
The industry body said there is an urgent need to kick start the investment cycle through speeding up clearances by the Cabinet Committee on Investment (CCI) and addressing supply-side bottlenecks in infrastructure.
The IIP growth slipped to 2 percent in April on account of dismal performance by manufacturing, mining and power sectors coupled with lower output of capital goods.
The IIP growth rate for March this year has been revised to 3.4 percent from the provisional estimates of 2.5 percent released last month.
Assocham President Rajkumar N Dhoot said: "What is worse is that we find ourselves in a deadly combination of terrible industrial slowdown and high inflation at the retail level in May, 2013. This reflects a very difficult state of affairs that the Indian economy finds itself in."
"The stubborn nature of the slowdown can be helped only by some bold measures by government in terms of providing an enabling environment for investment. The government must take a lead in reviving the investment sentiment," he said.
In its statement, Ficci said, "Growth in manufacturing though seems to have bottomed-out but remains fragile as some major sectors like basic metals, automotive, machinery and equipment have shown negative growth."
Manufacturing sector, which constitutes over 75 percent of the index, grew by meagre 2.8 percent in April against a decline in the output by 1.8 percent in the year-ago month.