Slowdown in industrial growth rings alarm bells

SLOW GROWTH: The outlook for growth is still uncertain while most agree it will slowdown.

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• Inflation rises to a new high of 8.1 pc, FM worried
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• India's economy to grow about 8 pc
• MTN-Reliance Communication talks extended to July 21
• US billionaire investor confirms interest in Spicejet

Keywords: indian, economy

New Delhi: Sluggish performance of the manufacturing sector pulled down growth in industrial production to a six-year low of three per cent in March. This has compounded worries of the Government and RBI that are trying to fight inflation.

It’s a double whammy as inflation is soaring to record highs industrial growth has plummeted to a six-year low.

The index of industrial production and component of GDP growth slipped to 3 per cent for the month of March as compared to 14.8 per cent an year ago.

Last year or financial year FY08, industrial growth stood at 8.1 per cent against 11.6 per cent last year.

The Central statistical organisation or CSO which comes out with the estimates says the sharp drop is due to a high base effect last year. But the Government for now says this is just an aberration.

The Government has been keeping interest rates high to keep demand low this has hit the industry and consumers hard.

While industry finds that borrowing costs are going up consumers are discouraged from buying products like refrigerators, air conditioners and even automobiles.

Car sales rose just 12 per cent in the fiscal year, slower than the 22 per cent gain in the previous period.

With inflationary pressures remaining high, economists do not expect interest rates to come down in the near future but the outlook for growth is still uncertain while most agree it will slowdown but how much is still a big question.