New Delhi, June 20: Industrial production is expected to dip marginally in the next three months mainly due to rupee gaining strength against dollar and declining non-food credit, even as petrol and diesel might become cheaper, according to the Institute of Economic Growth. Referring to the industrial growth, which ticked 4.9 per cent in April 2003, as "temporary", IEG said "increase in the trade deficit (due to exchange rate appreciation) and fall in non-food credit, will lead to a marginal decline in industrial output from its current levels."
Further, it was apparent from the current negative trend in the consumer durable goods that there existed strong demand constraints in the economy, it said.
The Delhi-based institution forecast that the growth rate of IIP (Index of Industrial Production) was likely to be 4.8, 4.6 and 4.5 per cent for the next three months respectively.
Justifying the strengthening of rupee against dollar, it said strong dollar inflows from exporters and weakened dollar in the international markets, coupled with SARS situation in the emerging Asian markets, which might have diverted the FII (Foreign Institutional Investments), had led to appreciation in the exchange rate.
Bureau Report