Industrial growth surged 2.5 per cent in March making Government confident of economic growth crossing 6 per cent in 2013-14 but India Inc feels that the industry is still not out of the woods. They demanded interest rate reduction and steps for investment revival.
Though industrial growth recovered, this could not prevent it from falling to a twenty year low of 1 per cent during 2012-13.
led by better performance of sectors like manufacturing, power, capital goods and consumer non-durables, factory output measured in terms of the Index of Industrial Production (IIP), rose to 2.5 per cent raising hopes that economic growth might cross 6 per cent mark during the current fiscal.
Commenting on the data, chairman of the Prime Minister’s Economic Advisory Council (PMEAC) C Rangarajan said: “This will be the second or third month in which the manufacturing growth will be positive. We were for a time in the negative territory.”
We are happy to see IIP numbers. This is exactly the trend we are hoping. If (the trend) continues, inflation comes down and growth begins to pick up, I am quite confident that growth in current fiscal would cross the 6 per cent mark,” Economic Affairs Secretary Arvind Mayaram said.
For the fiscal 2012-13 as a whole, the IIP slipped to one per cent, the lowest since 1991-92 when the factory output grew by a meagre 0.6 per cent. It was 2.9 per cent in the previous fiscal.
“IIP data reveals that the Indian industry’s performance in 2012-13 is its worst showing in the past 20 years...The current situation is reminiscent of the crisis year of 1991-92 when industrial output grew by a mere 0.6 per cent...” said rating agency Crisil.
“Interest rates need to be further moderated to stimulate investment activity,” Ficci President Naina lal Kidwai said. Sharing similar views, CII Director General Chandrajit Banerjee said, “We are looking forward to an accommodative monetary policy regime to spur investment.”
Commerce and Industry Minister also reiterated his concern over slow growth in the overall industrial production. “The concerns remain... The Government-industry task force would meet soon and we will make an appraisal (about the manufacturing sector) and whatever intervention is required shall happen,” he said.
As per the IIP data, power generation grew by 3.5 per cent in March this year compared to a growth of 2.7 per cent in same month last year. During 2012-13, electricity generation had gone up by 4 per cent against 8.2 per cent in 2011-12.
The capital goods output saw a growth of 6.9 per cent in March this year compared to a decline in production by 20.1 per cent in the same month of 2012.
During the entire last fiscal, the capital goods production declined by 6.3 per cent compared to a contraction of 4 per cent in 2011-12.