Factory output dips 0.4%
India Inc seeks rate cut by RBI
Belying hopes of an early economic revival, industrial production contracted by 0.4 per cent in September on account of dismal performance of manufacturing and capital goods sectors, prompting India Inc to press for interest rate cut by the Reserve Bank of India (RBI).
The industrial output growth rate turned negative in September after showing 2.3 per cent growth in the previous month. The Index of Industrial Production (IIP) was at 2.5 per cent in the corresponding period of last year.
Terming the decline in IIP as “very disappointing”, Planning Commission Deputy Chairman Montek Singh Ahluwalia said the data did not reflect the impact of recent reform initiatives which would manifest in the later part of the fiscal.
Prime Minister’s Economic Advisory Council (PMEAC) Chairman C Rangarajan said it was disappointing to see IIP slipping into negative after showing signs of improvement in August and hoped that things would improve in the coming months. After the poor industrial output in September, he said the economic growth could be in the region of 5.5 per cent.
CII stepped up its demand for 0.5 per cent cut in interest rate by the RBI saying “a complete sacrifice of growth is not in the interest of the economy”.
It also wanted reduced repo rate and CRR by another 0.5 per cent each.
Ficci President R V Kanoria called for implementing big ticket reforms, expediting infrastructure projects and easing monetary policy to bring the economy back on track.
“At this juncture, it is important that the government does not lose momentum on the reform front,” he said.