New Delhi, July 13 (ANI): The Confederation of Indian Industry (CII) has reacted with dismay and disappointment over the negative Industrial Production Index (IIP) figures, and said the unexpected contraction of 1.6 per cent up until May this year in comparison to the same period last year, is a cause for serious concern.
Commenting on the IIP data, the Director General of CII, Chandrajit Banerjee, said the numbers are disappointing.
The industrial production contraction has also shocked economists and put a question mark on economic recovery this year.
According to government data, the manufacturing sector, which makes up 76 per cent of industrial production, shrank two per cent from last year. The mining sector also contracted 5.7 per cent. Also, April's IIP data was revised downward to 1.9 per cent from 2.3 per cent earlier.
According to a poll conducted by Bloomberg, economists were expecting a growth of 1.4 per cent in IIP, but these numbers put a question mark on growth assurances given by the government. Gross Domestic Prodcut growth slowed to mere five per cent in the last fiscal, slowest in a decade.
Economists said weak auto sales numbers and disappointing show on exports due to weak external demand have impacted IIP numbers.
The slowdown is also a reflection of weakening consumer demand and slowing investment.
The average IIP growth numbers are just 0.2 per cent for the first two months of the June quarter, against the average 1.5 per cent in first two months of the January-March quarter.
According to Banerjee, the prevailing situation requires the government to show a strong resolve to push through reforms which would boost investment and reactivate demand. Policy action would have to be supported by administrative pro activity by clearing projects which are held up owing to various clearances not having come through.
Similarly, providing a competitive free market in the coal and mining sectors, assuring coal supplies to the power sector and bringing a transparent policy on natural resources would revive investor sentiment. CII also hopes for an accommodative monetary policy on 30th July to spur demand and revive investment activity, said Banerjee. (ANI)