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Anand Sharma to hold Industry Consultation on decline in IIP on 19th Dec Print E-mail
Written by Ganesh   
Tuesday, 13 December 2011
New Delhi: The Union Minister for Commerce, Industry and Textiles, Anand Sharma has expressed deep concern over the sharp decline in industrial production particularly in the fall of manufacturing which are engaging Government’s attention at the highest level. The Minister will hold Government-Industry consultation on the issue on 19th December 2011 after his return from WTO Ministerial.

The 5.1% decline in October IIP came as a serious disappointment to industry, which was not expecting such a sharp decline despite the base effect at work.

"CII surveys have been pointing towards declining business sentiment and poor growth prospects for some time. While all sectors have fallen in October, the sharp decline in the capital goods sector is of particular concern, as it indicates a lack of investments, which will continue to be a drag on growth. The continued decline in the mining sector indicates the problems created by the closure of mines. CII is concerned that if allowed to continue, this would have serious consequences on employment and livelihoods," said Chandrajit Banerjee, Director General, CII.

"CII believes urgent measures are required to induce investments, including creating a shelf of bankable projects - particularly in infrastructure, identifying the top 100 investment projects in the country and having them taken forward with a monitoring mechanism instituted at the Centre, gradual roll back of interest rate increases, improve the fiscal situation - which in trurn would help ease the effective rate of interest, create a taxation environment that is conducive for investments, among other measures. The industrial slowdown is taking very serious dimensions and there is an urgent need to improve sentiments if the downward trend has to be checked," he said.

Industry body ASSOCHAM said estimates of industrial production for October mirror the continued downfall of industrial activity. The 5.1 per cent contraction in overall industrial activity dragged down cumulative growth of the sector since April 2011 to 3.5 per cent.

"The continued fall in the manufacturing sector has been a worrying factor," said ASSOCHAM secretary general D.S. Rawat. While manufacturing performance has been a cause of concern for a long time, mining also started posting subdued growth in the recent past.

The electricity sector only has posted some growth. However, this has no consequential effect on the prevailing under achievement of planned targets in this sector. Financial markets and performance services sector are the immediate casualties of this trend.   

Considerable fall in the capital goods production (-25.5 per cent) coupled with the decline in production of intermediate goods (-4.7 per cent), basic goods (-0.1 per cent) and consumer non-durables (-1.3 per cent) testify the appalling state of industrial activity.

The Associated Chambers of Commerce and Industry of India (ASSOCHAM) has been highlighting the issue for quite some time and looking forward to seeing corrective measures from policy makers.

"It strongly feels that till the hyper inflation conditions are reversed in India and normalcy is restored in developed economies, policy makers need to take more responsibility to make a realistic assessment and follow it up with appropriate policy measures," said Mr Rawat. "Policy dynamism is the need of the hour."

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