Terming the June 2015 IIP numbers 'slightly encouraging,' apex industry body ASSOCHAM today said that industrial activity is showing some signs of revival as indicated by the 3.8 per cent growth seen in June 2015 over the corresponding month of 2014 though there is a lot that still needs to be done.
While expressing some level of satisfaction, The Associated Chambers of Commerce and Industry of India (ASSOCHAM) said, "Unsustainable growth performance seen in intermediate, capital and basic goods has been disappointing, though there seems to be some turnaround in the consumer goods sectors."
"Going into the disaggregated sectoral figures we see that the manufacturing growth seems to be gaining momentum as is evident from the growth numbers," said Mr. D.S.Rawat.
The manufacturing growth rate stands at 4.6 per cent for June 2015 as against the 2.9 per cent in June 2014.
"The subdued performance of the electricity sector in June 2015 as compared to the previous year (1.3 per cent in June 2015 as against 15.7 per cent in June 2014) and the decelerating growth of mining sector seem to be a cause for some worry that would need the urgent attention and action of the policymakers," said Rawat, secretary general of ASSOCHAM.
"In terms of the use-based classification deceleration in the capital goods sector and slowing down of basic and intermediate goods remain major causes of worry," he said.
"The need is to find practical solutions to the problems that impede higher production or output in these sectors," he added. "As already indicated a major positive is the turnaround of the consumer goods segment, especially the consumer durables sector which has shown positive growth after a prolonged period of slowdown observed in the past."
"Overall it is felt that a complete recovery of the industrial production still seems to be a distant dream," further said Mr Rawat.
ASSOCHAM also found the outcomes of the recent RBI policy review to be slightly disappointing. While it acknowledged the RBI's views it still felt that the Central Bank should have reduced the rates a bit to provide a fillip to the industrial growth.
"It must be realized that uncompetitive interest rates affect the credit availability and its cost to the corporates, especially the SME sector," said Mr Rawat. "It is against this backdrop and with the WPI prices seemingly under control that we had hoped the Central Bank would have taken a broader view and announced rate cuts in its credit policy so as to boost investor sentiments."
ASSOCHAM has been highlighting the need for creating conducive environment for investments, capacity creation and augmentation of industrial production on priority basis.
"It should be the primary objective of the government to address challenges that would further boost the industrial growth at this juncture," said Rawat.
"It is extremely important for the growth momentum to be maintained, besides concentrated and sustained efforts need to be targeted at reviving the electricity, basic and the capital goods sector," he said. "Government needs to address the peculiar challenges faced by these segments which would then further boost the industrial growth of the economy.
