The Centre for Monitoring Indian Economy (CMIE) has revised down its industrial growth forecast for the current fiscal to 3.5 per cent from 4-4.5 per cent projected earlier.
"The projection is based on an expectation of robust growth in non-metallic mineral products segment, a continuation of the small improvement witnessed in the transport sector and a substantial improvement in the rubber plastic products and petroleum products segment," CMIE said.
To achieve an industrial growth of 3.5 per cent for the full fiscal, production has to increase by 4.7 per cent year-on-year in the second half, CMIE pointed out. It feels that the global economic scenario is still bleak and the domestic investments do not show any sign of growth.
During the first half of the year, the index of industrial production (IIP) grew only by 2.3 per cent. Some of the large sectors -- cotton textiles, jute goods and capital goods -- recorded a fall in the production.
"Although a slow growth during the first half was expected, the promise was in the second half and the factor that was expected to cause shift in the growth rate was the rise in agriculture incomes, following good monsoon of 2001. The crop is good this year and the agricultural incomes have risen. But the benefits seem to be a shade poorer than expectations," CMIE said.
The research think-tank said a large part of the benefit of a higher agricultural production was offset by a significant deterioration in exports markets and a fall in the commodity prices.
"Thus we expect recovery to be elusive for the cotton textiles, textile products (including apparels) and basic metals industry. Weak commodity prices and large stock (particularly of sugar) would keep production of major food products also very low," CMIE explained.
