Recovery in IIP encouraging: PHD Chamber

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SME Times News Bureau | 14 Nov, 2013
The recovery in Index of Industrial Production (IIP) growth in the month of September 2013 is inspiring as it has geared to 2 percent from 0.4 percent in August 2013, said industry body Wednesday.

"With positive developments at agriculture front such as good kharif crops production and inspiring rabi crops sowing, domestic demand conditions are expected to improve in the ensuing months and industry sector is expected to continue in the positive growth trajectory, going forward," said Suman Jyoti Khaitan, President, PHD Chamber of Commerce & Industry.

However, the IIP has been witnessing sharp fluctuations since April 2013 as growth in IIP was recorded at 1.5 percent which decelerated to -2.5 percent. In the month of June 2013, the growth in IIP was recorded at -1.8 percent which increased to 2.8 percent in July 2013.

Negative growth in capital goods at (-) 6.8 percent in September 2013 indicates that investment cycle is still in the fragile territory which needs to revive with reduced costs of funds in terms of rate cut and reduced costs of doing businesses in terms of improving regulatory environment, said Khaitan.

Reacting to the jump in inflation figure, Khaitan said that tough the country has received good kharif crops production and outlook for rabi crops is also promising, escalation in the CPI inflation which is re-emerging month after month and has entered double digit trajectory is worrying .

CPI is estimated at 10.09 percent in the month of October 2013 as against 9.84 percent in September 2013.

There seems a severe problem in the supply side management as production is not reaching easily to consumers’ doorsteps. At this juncture, Inflation in India can be tackled only by easing supply side constraints and improving infrastructure at a rapid pace, which can lead to an overall development in the economy, going forward, said Khaitan.

The government must enhance public investments in infrastructure sector especially the agriculture infrastructure in terms of supply side infrastructure i.e. farm gate to consumer doorstep supply chain management, which could effectively tackle the challenge of inflation.