With industrial production contracting for the third straight month, India Inc said the delay in the recovery of manufacturing is bound to hit economic growth, urging government to take measures to improve ease of doing business scenario to attract investments.
"The delay in the recovery of manufacturing is going to impact the overall economic growth. There is a need for addressing the issue of ease of doing business in a comprehensive manner that would pull the investments into manufacturing," Ficci Secretary General A Didar Singh said.
"... We hope to see further rate reduction in the forthcoming monetary policy that can stimulate demand and investments in the economy to support manufacturing growth," he added.
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Showing sluggishness in the economy, industrial production contracted by 1.5 per cent in January -- its third straight month of drop -- due to poor performance of manufacturing sector and lower offtake of capital goods.
Assocham President Sunil Kanoria said the IIP numbers present a negative outlook for the economy.
"The negative growth of General Index further worsens the prevailing levels of demand-supply imbalances in the country. The significant shrinkage in the production of capital goods and consumer non-durables shows that industrial revival is going to be one of the major challenges in days to come," Kanoria said.
He said the government must back its promises with clear action on the ground by making compliances easy and efficient.
The decline in January has been primarily on account of a massive drop in output of capital goods, which showed a contraction of 20.4 per cent in January compared to a growth of 12.4 per cent in the same month a year ago.
The manufacturing sector, which accounts for over 75 per cent of the index, declined by 2.8 per cent against a growth of 3.4 per cent in January 2015.
"Decline in capital goods is worrying as it is indicative of investment activities in the economy," said PHD Chamber President Mahesh Gupta.
In terms of industries, 10 out of the 22 industry groups in the manufacturing sector showed negative growth during January.
