Commerce and Industry Minister Anand Sharma has urged the finance ministry to look at making available easy credit flow to the Indian industry by loosening its stance in the monetary policy in order to ensure healthy industrial growth.
While rising food prices has led the government to sit upright and take some effective steps in controlling the situation, a sluggish industrial output has made the situation worse, shaking the business and investors’ confidence.
“A selective restriction on credit may be necessary to check inflationary pressures, but the imperative of easy credit flow for the industrial sector, especially, infrastructure and manufacturing, is crucial for the economy,” Sharma said in a letter to Finance Minister Pranab Mukherjee.
This comes in the backdrop of a weak industrial output growth rate of 2.7 per cent in November, the lowest in the last 18 months.
Sharma also mentioned in the letter that the industrial sector needed “sustained support to enable complete recovery from recession” even as the government was taking aggressive steps to rein in the soaring inflation.
He said that rise in prices of essential food items, primary articles and vegetables is due to supply-side problems, hence, the Reserve Bank of India (RBI) policy measures should focus mainly on making credit flow easier for the industry.
“The high inflation in primary articles, particularly vegetables, are more due to supply-side constraints and monetary policy may not be the most suitable intervention to tackle the situation,” he said.
Sharma added decline in the production of consumer durables, industrial machinery cement and petroleum refinery products was a greater concern.
