'High interest rate to continue to take its toll on IIP'

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SME Times News Bureau | 22 Aug, 2012
The impact of high interest rates is likely to continue impacting industrial growth in the coming days, said exporters' body FIEO on Tuesday in New Delhi.

High interest rates may continue to act as a dampener to the IIP index, FIEO president M. Rafeeque Ahmed said while commenting on the data released by RBI on credit off-take moderating to 17.2% for the week ending 17th august, 2012 (as against 18.7%)in the corresponding period last year.

"Industrial output growth averages zero in April-June, the first quarter of 2012-13. This is only a bit better than exports that average -1.3% in the same period against a robust 18% growth over January-March, when net exports added 4 percentage points to GDP growth," he added.

The FIEO chief cautioned that GDP to be released by the Government on 31st august, 2012 in the first quarter of 2012-13 will likely be weaker than the 5.3% seen in January-March.

Ahmed emphasized on putting infra projects on fast track with a Monitoring Committee for timely completion and cost overrun.

Besides a moderation in rates in mid September RBI monetary policy review, a general push to the economy is required given the sluggishness seen in various projects across the country-resulting in cost escalation and losses to the national exchequer for example-delays in execution of mega infrastructure projects has seen a massive Rs 52,446 crore jump in their original cost estimates, he viewed.

The cost overrun pertains to 28 power projects, 36 railway projects and 84 schemes of Ministry of Road Transport and Highways.

The FIEO president asked the Government to put execution of all such projects on fast track with a monitoring committee for close follow up of projects to ensure timely completion and cost overrun.