New Delhi, Jan 10: India Inc Friday said the contraction in industrial output in November is a worrisome trend and asked the government to speed up investment in manufacturing and mining.
“The November index of industrial production which continues to be in the negative territory for the second month in a row, is extremely worrisome,” said Chandrajit Banerjee, director general, Confederation of Indian Industry (CII).
“It is recommended that the government should send out positive signals that it is renewing its focus on growth. This would involve ensuring that projects getting cleared by CCI are implemented on the ground.”
Banerjee said steps such as encouraging competition in the mining sector, start of all legal mining in the ban affected states, and speedy implementation of Delhi-Mumbai Industrial Corridor (DMIC), among others, would bring industry back to the path of growth.
The industry’s reactions comes as India’s industrial output dropped by 2.1 percent in November due to a sharp contraction in manufacturing production.
Manufacturing production in the month under review slumped by 3.5 percent, while mining grew at a sluggish one percent and electricity output increased by 6.3 percent.
In the first eight months of the current fiscal manufacturing sector has contracted by 0.6 percent, while mining output has declined by 2.2 percent.
Other leading industry body Federation of Indian Chambers of Commerce and Industry (FICCI) said that the sequential negative growth in IIP in October and November showed a disturbing term.
“This (IIP) reinforces the belief that fall in manufacturing growth has not yet bottomed out. Urgent measures and fresh thoughts are required to boost manufacturing, without which the jobs potential here will remain depressed,” said Sidharth Birla, president, FICCI.
On the other hand, Associated Chambers of Commerce and Industry of India (Assocham) said the current negative trend in IIP would have a severe impact on employment.
“A sharp reduction in demand would force companies to prune headcount to remain afloat. We wish it does not happen that way,” said Rana Kapoor, president, ASSOCHAM.
Export sector too will face the heat of a continued contraction in the IIP said, Engineering Export Promotion Council (EEPC).
“If the trend is not reversed immediately, exports, particularly of the engineering goods may not be able to keep pace of growth,” said Anupam Shah, chairman, EEPC.