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