Industry dismayed at IIP figures, asks govt to push reforms

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New Delhi, Aug 12 (UNI) Industry today expressed disappointment at the two key data released by the government--IIP at 5.4 per cent and core infrastructure industries at 3.4 per cent--fearing that the long-term India growth story may get impacted and the country be prepared for a deceleration in economic growth.

It said while the IIP growth of 5.4 per cent was higher than 4.1 per cent growth recorded in May 2008, it was still quite low when compared to the 8.9 per cent growth recorded in June last year.

The apex chambers said the government should take the opportunity to push reforms and desist from continuing with tight monetary policy and lower interest rates to enhance industrial competitiveness and boost demand.

FICCI Secretary General Amit Mitra said most industry surveys show that industrial growth may look up during the terminal period of the current fiscal provided the government takes some pro-active reform measures to redress the genuine grievances of the manufacturing sector.

Dr Mitra said the rising interest rates were hitting the small scale sector the most, which is finding it difficult to meet its working capital requirements.

There were indications that fresh investment plans were being reviewed by the industry in view of the recent uncertainities, especially on the oil price front.

PHD Chamber Secretary General Krishan Kalra said it was worrisome that the slowdown in demand, which was earlier restricted to the consumer good sector, was now being spread across all segments with the exception of consumer non-durables.

The slowdown in capital goods sector indicates that investment demand was also slowing down stoking concerns with the rising inflation rate, hike in interest rates and the rise in input cost has made a dent in the bottomline of the corporates, which find its reflection in the manufacturing growth which has slumped to 5.6 per cent compared with 11.1 per cent last year.

Mr Kalra said the economy was heading towards an eight per cent growth this fiscal which was a major decline after achieving more than nine per cent growth for the last four years.

The reform areas outlined by the chambers included infrastructure, power, agriculture, banking, insurance, pension and energy.

The industry spoke of the need for stepping up capital formation to propel growth to meet at least targetd level of nine per cent.

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