India Inc today said decline in industrial growth to 7.1 per cent in June was on expected lines and attributed the fall to part withdrawal of the economic stimulus, coupled with a relatively stronger rate of growth in the same month last year.
"The fall in industrial production was on expected lines as it largely reflects a higher base in the same period last year," CII Director General Chandrajit Banerjee said.
Industrial growth slipped to a 13-month low in June because a drop in manufacturing output.
Banerjee said despite the low production, the country would be able to post a high GDP growth of 9 to 9.5 per cent this fiscal.
Ficci said that although the decline was expected, it is a matter of concern that the June growth this year is less than that of June 2009, during which the world had to battle global economic meltdown.
The industrial growth was 8.3 per cent in June 2009.
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"The slowdown in Indian manufacturing sector is...Also due to the gradual phasing-out of monetary and fiscal stimulus," said Ficci Secretary General Amit Mitra.
The government had increased the excise duty by two per cent in the Budget, 2010-11. As part of the stimulus measures, the excise duty was slashed to help the industry wade through the global economic slowdown.
Another leading industry body Assocham, however, said the June growth slipped due to the rising cost of inputs coupled with continuing inflationary pressures.
"Major factors, which led manufacturing to suffer is the inflation and rise in prises of petroleum products and overall increase in the prices of commodities, including metal and primary articles," Assocham President Swati Piramal said.
She said the government should prescribe measures for friendly monitory and fiscal policies to help industry restore manufacturing growth.