Business Sphere - - Over­view - Econ­omy - By Our Cor­re­spon­dent

Mon­tek Singh Ah­luwalia, Plan­ning

Com­mis­sion Deputy Chair­man

Re­serve Bank and the gov­ern­ment will have to take some bigticket re­forms mea­sures to push in­dus­trial pro­duc­tion, which has shown muted growth at 2.4 per cent in May, and also the econ­omy, which slipped to nine-year low of 6.5 per cent dur­ing 2011-12. The first ac­tion will have to come from the RBI which is slated to an­nounce first quar­terly re­view of its an­nual mone­tary pol­icy on July 31. The cen­tral bank, which opted for sta­tus quo last month, will be un­der tremen­dous pres­sure to cut in­ter­est rates, though ex­perts feel that high in­fla­tion, which is much above the com­fort level of the RBI, may play the spoil sport. The re­cent In­dex of In­dus­trial Pro­duc­tion (IIP) re­vealed that fac­tory out­put growth dur­ing May slipped to 2.4 per cent from 6.2 per cent in the cor­re­spond­ing pe­riod in the last fis­cal. The slip­page in May was mainly on ac­count of con­trac­tion in cap­i­tal goods and min­ing out­put, cou­pled with poor show by man­u­fac­tur­ing sec­tor. Al­though one can take some com­fort from the fact that May fig­ure was bet­ter than the neg­a­tive growth of 0.9 per cent in April, such low fig­ures do not au­gur well for ei­ther econ­omy or the in­dus­try and will have a bear­ing on the over­all growth in the cur­rent fis­cal. The in­dus­trial growth rate for April, 2012 was re­vised down­wards to (-)0.9 per cent, from 0.1 per cent re­ported ear­lier. For the first two months of the cur­rent fis­cal, April-May, the in­dus­trial growth is sharply lower at 0.8 per cent, com­pared to 5.7 per cent in the year-ago pe­riod. Ac­cord­ing to the data, the cap­i­tal goods out­put de­clined 7.7 per cent in May, as against a growth of 6.2 per cent in the same month last year. Min­ing out­put con­tracted by 0.9 per cent in May, as against growth of 1.8 per cent in the same month a year ago. The man­u­fac­tur­ing sec­tor which con­sti­tutes over 75 per cent of the in­dex, did not per­form well as it grew a mea­ger 2.5 per cent, as against 6.3 per cent in May 2011. Con­sumer Durables pro­duc­tion showed a faster growth rate of 9.3 per cent in May, as com­pared to 5.1 per cent in the same month last year. The con­sumer non-durables seg­ment out­put growth re­mained flat at 0.1 per cent in May, as against 9 per cent in the same month last year. Power gen­er­a­tion wit­nessed a slower growth of 5.9 per cent dur­ing May, com­pared to 10.3 per cent in the same month a year ago.

Anand Sharma, Com­merce and In­dus­try Min­is­ter

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