Govt calls meet with India Inc, trade bodies

Will reassure industry on IIP numbers

With the country’s industrial production sliding into negative zone threatening the overall economic growth, Union Commerce & Industry Minister Anand Sharma has called a meeting of India Inc and the country’s apex export body to suggest measures to come out of the difficult situation.

The meeting next week will take stock of the evolving industrial situation in the country after the official industrial output data released on Thursday showed a grim consumption and investment scene.

Index of Industrial Production (IIP) contracted 1.8 per cent in June, led by a collapse in production of capital goods, an indication that corporate investment continues to dry up. This is the third fall in factory output in the past four months. The slump comes at a time when a weak monsoon is likely to harm farm output as well.

Sharma has also called a meeting of the government-industry task force to review the situation. The task force is assigned to give inputs from the captains of industry in the policy-making process.

“Sharma will first meet the industry chambers like Ficci and CII along with Federation of Indian Export Organisation (Fieo),” a ministry statement said.

The Commerce Minister has been regularly reviewing the situation with senior officials and has expressed concern over the drop in industrial performance in recent months, the statement said. Sharma had also met Finance Minister P Chidambaram and discussed important issues ailing the economy.

Analysts apprehend the problems in the industrial sector are now of a generalised nature with signs of pressure on production of consumer goods as well. The weak rural demand due to drought is only expected to add pressure on sales of consumer goods in the coming months.

Slowing industrial production in the first three months of the calendar year impacted India’s GDP growth, which slipped 5.3 per cent in the January-March quarter.

A weaker-than-expected factory output in the months of April, May and June have the potential to lower the overall economic growth further. Many economists and rating agencies have already pared estimates of India’s economic growth this year.

 Official estimates are now also being reduced with RBI has cutting its growth forecast to 6.3 per cent and Planning Commission to 6 per cent. Country’s exports have also declined in the past months.