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Sept IPP growth rate difficult to sustain - Amit Mitra, FICCI
14
Nov '08
“The 4.8% growth rate in manufacturing in September 2008 is more encouraging than the growth in August 2008 which was 1.1.%. But this growth is difficult to sustain or pick-up in the coming months in view of the production cuts recently announced by some of the major corporates in real sectors like steel, auto etc. and also because of the weakening export demand in sectors like textiles”, said Dr Amit Mitra, Secretary General, FICCI.

FICCI observed that the latest figures of IIP are indeed a matter of serious concern because many employment intensive industries in the real sector like cotton textiles, apparels, jute and other vegetable fibres, wood, furniture, leather and leather products etc. have shown negative growth in September. Most of these sectors are dominated by SME players and also some of these sectors are heavily dependent on exports. Since the global demand is weakening further fall is expected in these sectors which would affect the SME sector in a major way.

The key interest rates that were raised sharply in stages during the last one and a half years have affected the growth of India's industrial sector. FICCI believes that while RBI has reduced the key rates recently, there is still ample scope for further cuts in the key policy rates. Even today average interest rates being charged from industrial borrowers is in excess of 13% which is prohibitively high to sustain investment rate of the last few years. Also, measures are required to boost exports by providing credit to the exporters at international rates and restoration of the interest subvention scheme for the exporters.

“All this underlines the need for appropriate interventions in the industrial and export sector on immediate basis, particularly for the SME sector”, Dr Mitra emphasised.

FICCI

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