Commenting on the index of Industrial Production data for July 2013, Confederation of Indian Industry (CII) Director General Chandrajit Banerjee said CII has taken note of the return of industrial growth to the positive terrain, which marks a break from the past two months which evidenced a negative growth.
"This is welcome, though it is too early to presume that a recovery is underway," he said in a statement.
He said this IIP data would ensure that it does not act a dampener - as far as sentiments are concerned.
"Sentiments should further find favour in the positive news emerging out of the US and Euro zone, as also owing to the expected good performance in the domestic agricultural sector, leading to a strong rural demand," Banerjee said.
"But that should not distract us from the core issue that the manufacturing sector in India is performing far below its potential. The entire problem of current account deficit is a result of this deficiency, and significant interventions are required to ensure that India's manufacturing competitiveness improves. Similarly, the bottlenecks in the mining sector are creating a structural problem for the economy," he added.
"There is need for a well thought out short and medium term action plan to address these issues. The National Manufacturing Policy now needs to be implemented with some alacrity. There are also new opportunities emerging for India in certain manufacturing sectors, where China is facing difficulty in terms of higher wage costs," Banerjee said.
"In the very short term of course an easing of benchmark rates by the RBI would provide the much needed demand traction which has been ailing segments like consumer durables," Banerjee concluded.
