New Delhi: India’s industrial output grew by a meagre 0.1 percent in April due to a contraction in capital goods and dip in manufacturing and mining sectors, government data showed Tuesday, underlining the need for a monetary stimulus to revive growth.
Finance Minister Pranab Mukherjee voiced disappointment at the numbers and said there is a need to take measures. “I am disappointed … we shall have to take some steps which signals positivism,” he said while addressing a meeting of chiefs of public sector banks.
The data released by the Central Statistical Organisation showed that growth in factory output, as measured by the Index of Industrial Production (IIP), slowed down to 0.1 percent in April from 5.3 percent a year ago.
The figures showed that capital goods output declined by 16.3 percent as against a growth of 6.6 percent in the same month last year. The mining output contracted by 3.1 percent against a growth of 1.6 percent in the same month a year ago. The manufacturing sector grew only at 0.1 percent.
Industry associations reacted calling for a rates cut by the Reserve Bank of India in its mid-quarter review of monetary policy June 18. “The government, to rejuvenate business confidence and get industrial growth back on track, must initiate actions to revive industrial growth. RBI should reduce repo and CRR rates by 100 basis points to revive investment sentiment,” said Confederation of Indian Industry (CII) Director General Chandrajit Banerjee.
FICCI President R.V. Kanoria said: “In the immediate term, the government must push for reforms in areas where Parliament’s approval is not required so as to boost business confidence, which would encourage investments.”
The meagre growth comes in the backdrop of a fall of 3.5 percent in industrial production in March, the first such contraction since October 2011, when it shrank by 4.7 percent.
Mukherjee, however, said that several measures were being taken and growth would revive. The government will ensure faster project clearances and fix regulatory issues to boost investor confidence, he said.
At the Bombay Stock exchange, the benchmark index rose 1.2 percent to its highest close in over a month after the weak IIP data raised hopes of a cut in interest rates.