New Delhi: Disappointed over industrial output contracting by 4.2 per cent in October, India Inc has said the Reserve Bank of India (RBI) must slash interest rates urgently to spur demand while re-emphasising the need for faster roll-out of reforms announced by the government.
Dashing hopes of recovery, the industrial production contracted by 4.2 per cent in October, mainly on account of poor show by the manufacturing sector and a dip in the output of capital as well as consumer goods.
"The fall in manufacturing growth in October is disturbing, more so because it is broad-based and not limited to a few sectors. It is in line with the findings of our own manufacturing survey which expected slowdown in the third quarter," FICCI president Sidharth Birla said.
"It not only reflects slowdown in investments but also the deep-rooted slackness in consumer demand which requires bringing down the interest rates urgently. It would also need faster implementation of government's intentions to introduce reforms in which states have a major role to play," he added.
Manufacturing output, which constitutes over 75 per cent of the index, contracted by 7.6 per cent in October as compared to a dip of 1.3 per cent in the same month last year.
"Substantial efforts have been made by the government to ensure a recovery in the economy. Actions are already very visible and results are on the ground. Industry is also positive about additional investments. All this can now be complemented by a reduction in interest rate by RBI," CII Director General Chandrajit Banerjee said.
The production of capital goods, a barometer of demand, declined by 2.3 per cent in October, against a growth of 2.5 per cent in same month last year.
The consumer goods output too contracted by 18.6 per cent in October as against a decline in output at 5 per cent logged a year ago.
"A realistic assessment of the government on what is hurting the industry and what is lacking is needed in order to see sustained industrial growth and achieve the objectives of 'Make in India'," ASSOCHAM secretary general DS Rawat said.
Overall, 16 of the 22 industry groups in manufacturing showed negative growth in October.
