Fearing that industrial growth may decelerate in the coming months, industry chambers today urged the Reserve Bank not to take any steps that may have an adverse bearing on the manufacturing sector.
"The impact of a low base effect on the growth of the manufacturing sector is gradually receding and it is likely that from June onwards, we may see further slowdown in the manufacturing sector,"Ficci secretary general Amit Mitra said.
Industrial growth slipped to a low 11.5 per cent in May, from a high 16.52 per cent in the previous month. In May 2009, the index of industrial production (IIP) grew by 2.1 per cent. The low base effect means growth at this time last year was quite low, so even a nominal rise in growth looks higher.
The robust growth in capital goods sector is also on the back of negative growth last year, the chamber pointed out.
"The forthcoming review of the monetary policy (by the RBI) should keep this in mind before announcing any measure that would further hurt or discourage the sentiment in the manufacturing sector," it said.
The leading chamber further said the textile sector, the largest employer after agriculture, continued to witness a a meagre growth of 1.7 per cent in May, 1.5 per cent in April and -5.4 per cent in March.
PHD Chamber president Ashok Kajaria said the industry is not out of the woods yet. Growth in industrial production has been achieved on a lower base and needs to be watched for a sustained improvement, Kajaria said, adding "availability of raw materials and credit at reasonable rates is a priority to boost demand and reduce production cost in industry."