For first time in two years, industrial output shrinks
DHNS

Write Comment     |     E-Mail To a Friend     |     Facebook     |     Twitter     |     Print


High interest rates, high cost of investment and tepid export demands impacted India’s industrial output, as index of industrial production (IIP) contracted 5.1 per cent in October, for the first time in more than two years, prompting the government to call a meeting of industrialists next week to discuss the issue.

The fall in IIP also saw BSE India Sensitive Index shed 343 points or 1.12 per cent, eroding investor wealth by nearly Rs 3 lakh crore. The rupee hit an all-time low of 52.85 to a dollar. The last time, industrial production growth had shrunk by 1.8 per cent was in June 2009.

Capital goods, manufacturing and mining sectors pulled down growth in the IIP, government statement showed. Production of capital goods fell sharply by a whopping 25.5 per cent in October, while the mining sector output declined by 7.2 per cent, the fall was 6 per cent in case of manufacturing sector, which accounts for over 75 per cent weight in the index.

Mining and manufacturing grew 6.1 per cent and 12.3 per cent respectively during the corresponding period a year ago. The fall in capital goods production was evident in the wake of a depreciating rupee at 52 per dollar and high interest rates which have pushing the cost of new investment. The contraction in industrial output spread across the sector showed both investment and consumption in the economy have stagnated.

Soon after the release of IIP data, government issued a statement saying sharp decline in Index of Industrial Production and particularly in the manufacturing are engaging government’s attention at the highest level. Commerce and Industry Minister Anand Sharma will hold government-industry consultation on the issue on December 19 after his return from WTO Ministerial.

Output of consumer goods also fell by 0.8 per cent during the month under review, as against a growth of 9.3 per cent in the corresponding month of 2010. Consumer durables production declined by 0.3 per cent, compared to a growth of 14.2 per cent in October last year.Production of consumer non-durables fell by 1.3 per cent against by 5 per cent expansion in October last year.

India Inc reacted sharply and urged the government to push investments and the RBI to ease ineterst rates. “RBI should immediately bring down the interest rates so as to stimulate investments and revive consumer durable demand. Also, it is high time that government reintroduces investment allowance and restores the fiscal stimulus by making the necessary fiscal space,” said Rajiv Kumar, secretary general, FICCI.
Write your Comments on this Article
Your Name
Native Place / Place of Residence
Your E-mail
Your Comment   You have characters left.
Security Validation
Enter the characters in the image above
    
Disclaimer: Please write your correct name and email address. Kindly do not post any personal, abusive, defamatory, infringing, obscene, indecent, discriminatory or unlawful or similar comments. Kemmannu.com will not be responsible for any defamatory message posted under this article.
Please note that under 66A of the IT Act, sending offensive or menacing messages through electronic communication service and sending false messages to cheat, mislead or deceive people or to cause annoyance to them is punishable. It is obligatory on kemmannu.com to provide the IP address and other details of senders of such comments, to the authority concerned upon request. Hence, sending offensive comments using kemmannu.com will be purely at your own risk, and in no way will Kemmannu.com be held responsible.
Similarly, Kemmannu.com reserves the right to edit / block / delete the messages without notice any content received from readers.




Beach Clean Drive | Thousand Beer Bottles on Beach
View More

Rozaricho Gaanch - December 2020Rozaricho Gaanch - December 2020
Congratulations to Prathiksha Shetty, KemmannuCongratulations to Prathiksha Shetty, Kemmannu
Congratulations to the winners of Panchayat Elections from Kemmannu Parish.Congratulations to the winners of Panchayat Elections from Kemmannu Parish.
Milarchi Lara December 2020Milarchi Lara December 2020
Flat for Rent at Gopalpura, Santhekatte, Udupi.Flat for Rent at Gopalpura, Santhekatte, Udupi.
Autobiography of Richard Carvalho, Barkur/Mumbai.Autobiography of Richard Carvalho, Barkur/Mumbai.
Contact on Going Residential ProjectAl Nayaab Residency, UdupiContact on Going Residential ProjectAl Nayaab Residency, Udupi
Choice Furniture vast household showroom opens at Santhekatte, KallianpurChoice Furniture vast household showroom opens at Santhekatte, Kallianpur
Focus Studio, Near Hotel Kidiyoor, UdupiFocus Studio, Near Hotel Kidiyoor, Udupi
Canara Beach Restaurant, Hoode/Bengre, Udupi.Canara Beach Restaurant, Hoode/Bengre, Udupi.
Delite Catering, SanthekatteDelite Catering, Santhekatte