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Updated: June 13, 2012 12:44 IST

Pranab worried as industrial growth hits rock bottom

Special Correspondent
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Government expresses disappointment over industry failing to shift gears

Just a day after Standard and Poor's India wake-up call for pro-active macroeconomic measures to kick-start the economy or face the prospect of losing its ‘investment grade' sovereign rating, the country's industrial engine appeared to run out of fuel and clocked a near-zero growth rate at 0.1 per cent in April, the beginning of the new fiscal year.

A dejected Finance Minister Pranab Mukherjee, who on Monday rejected the S&P report on the Indian economic scenario, said: “I am disappointed. Industry has not yet picked up. Negative sentiments are there. We have to take steps to give positive signals.”

These positive signals are likely to be unveiled in the months ahead. Commenting on S&P's observations on India's problem in policy and decision-making, Mr. Mukherjee said: “ ... from their point of view they have expressed their apprehension ...We have taken note of it and ... we shall have to sort out our own problems and for that, we are taking necessary steps.”

Besides, he said, as the “announcements made in the budget will take at least two to three months to show impact,” they did not reflect in the data for April.

Even as the growth rate in positive terrain marked a turnaround from the 3.2 per cent contraction seen in March, it was way below the 5.3 per cent expansion in April 2011, giving clear signals that business confidence and investor sentiment were at their lowest ebb in recent times.

Not surprisingly, the government expressed disappointment over industry failing to shift gear, but the bourses cheered the negative IIP (index of industrial production) numbers and rose to their highs for the month in the hope that the Reserve Bank of India is now left with no alternative to shoring up the economy by easing its key policy rates and making cheaper bank funds available to industry.

The IIP data makes for dismal reading. Clear evidence of tepid domestic demand owing to the ongoing global slowdown came for as many as 10 out of the 22 segments, including capital goods and mining, posting negative growth. More worrisome was the capital goods output — seen as a sign of new investments — which contracted by a massive 16.3 per cent in April 2012 as compared to a robust growth of 6.6 per cent in the same month of 2011.

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Capitalism in the hands greedy and hypocritical Indians (politicians, industrialists and bureaucrats) is destined to doom sooner or later, and it seems the boom time is over for the economy. Plundering and exploitation of our natural resources and common people have gone on for over two decades in the name of globalization and liberalization. Unless there is honest search of heart by well-meaning people at the top to change the course and take correct decisions for the benefit of ALL (not just for a few industrialists and business houses), the bubble is going to burst very soon and the writing on the wall is obvious.The question the our Fin Minister and Prime Minister should answer Is : for whom the economy is/should be growing ?

from:  J Gopalakrishnan
Posted on: Jun 13, 2012 at 16:06 IST

It is high time that Pranab Mukherjee be removed from 'Union Finance Minister' post. This move, in fact, would bring back the lost so called 'Investor Confidence' to a considerable extent. India needs not only honest, but also talented and bold person for key post such as the 'Union Finance Minister'.

from:  Janakiram
Posted on: Jun 13, 2012 at 15:43 IST

To get the expected results, Mr.Mukherjee has to show interest in Indian economy rather than bidding as a Rastrapathi.

from:  ramesh
Posted on: Jun 13, 2012 at 15:26 IST

There is an interesting possibility to the Government and Planning commission. Normally, the growth is near zero only in developed and mature economies. Since there is no growth to be seen in India, the Government should start advertisement campaign saying that India is now a developed country and thats the reason for near zero growth. Thanks to UPA & Team.

from:  Hemnath
Posted on: Jun 13, 2012 at 13:41 IST

If Pranab Mukherjee is surprised by the bad news, it is only because
he, along with other leading lights of Manmohan's circus, have
steadfastly refused to recognize the facts staring them in the face.
How long, Mr Finance Minister, do you think growth can be sustained
without any reform and with the widespread corruption, leakages and
profligacy? But I am sure that it is only a matter of time before
this loyal factotum of the Nehru-Gandhi family goes back to exuding
optimism - and deftly exits. He can become President and spend the
next few years visiting various countries at the tax payers expense,
unmindful of what is happening in the country.

from:  Daniel S Mahanty
Posted on: Jun 13, 2012 at 13:26 IST

Some of the comments here reflect no knowledge of economics. I'm
appalled at how people can make bold claims without knowing anything!
Hemachander may have hit thr right idea here though, because we were
having industrial growth without any clear policy initiatives which only
meant that it was happening so far by bending a few rules. And now these
rules have got stricter thus reducing growth. It would be great if the
FM uses this to implement policies that increase ease of business,
starting with imposing some reforms on taxation, judiciary and police!

from:  Rahul
Posted on: Jun 13, 2012 at 13:27 IST

Reason for economic slowdown is definitely not giving impetus to domestic industries by allowing cheap and subsidised Chinese imports.
At least now government has to put anti-dumping duties or other applicable duties specifically on Chinese products so that our industries survive and economy continue to grow.

from:  Suresh
Posted on: Jun 13, 2012 at 11:42 IST

"but the bourses cheered the negative IIP (index of industrial production) numbers and rose to their highs for the month in the hope that the Reserve Bank of India is now left with no alternative to shoring up the economy by easing its key policy rates and making cheaper bank funds available to industry "
Sir, when bourses bounce and dance it is all about lower rates which improve their own speculative activity. The correspondent must do better to inform the readers than mislead them.

from:  musthaq ahmed
Posted on: Jun 13, 2012 at 11:40 IST

The reason for the decrease in industrial growth in India is the negligence and laziness of our Indian industrialists.Mr.Mukherjee told that he was disappointed by seeing the decline in industrial growth.
That's not enough .
He should implement some financial rules regarding industries.
Every country is developing but our Indians showing lot of negligence.
our finance minister should pass some laws and rules.
This is my honourable request.

from:  ATMAKURI MANASA
Posted on: Jun 13, 2012 at 09:55 IST

It is time that Government should come out of their shell and start taking pro active steps. The only excuse given so far is coalition Dharma which obstructs the Government from moving forward. Why can't they take the main opposition BJP into confidence and plan forward. After all there is not much difference between the economic policies of Congress and BJP. One is the centre of the Centre party and another one is right of the centre. In times of national and global crisis like this, we should shed our petty inhibitions and work together to come out of this. Will they show some maturity and come to gether to face the challenges. It would be much better than depending on TMC, SP, BSP and DMK etc.,

regards

Sundaram Chellappa

from:  Sundaram Chellappa
Posted on: Jun 13, 2012 at 09:37 IST

Why is that Mr. Pranabji has all external reasons for his internal failures? Why is India being
singled out among BRICS countries for lowering of rating and why is the economy of US and
a whole bunch of countries is not deteriorating but India's is? Is it because of Greece, or
Maldives or Seychelles. Whom is Pranabji trying to fool? It is his ineptitude, coupled with the
lack of backbone to take strong decisions even if there is opposition from the other parties.
The country is more important than a bunch of oliticians. You could not control prices,
inflation, food distribution, economy, exchange rates, stock markets, infrastructural
development, FIIs etc. it is not to say that other finance ministers have done a great job
either. It is only to say that Pranabji has failed miserably and as per the Murphy's law he has
to be pushed up and that is made the president.

from:  Srinivasan R
Posted on: Jun 13, 2012 at 09:29 IST

Time has come when Indian government should frame stringent policies not
for their family or allies but for the country. If the job is left to
experts rather then these politicians then this negative slope will not
be witnessed.

from:  Arpit Goel
Posted on: Jun 13, 2012 at 09:08 IST

It's a serious issue that S & P is looking forward to downgrade the india's investment ranking. our country already facing economic crisis and over that this report is going to affect it badly. so Mr. Mukharjee must find some solution to resolve this situation by providing some economic boost to industrial sector.

from:  narender
Posted on: Jun 13, 2012 at 08:39 IST

I am surprised that Mr. Mukherjee is dejected. This is all because of crisis in Greece and the
Indian govt has nothing to with it, as Mr. Mukherjee likes to claim. Going by that logic he
should just go on as usual and focus on the presidential bid. Indian economy would take care
of itself!

from:  Jitendra Dutta
Posted on: Jun 13, 2012 at 07:36 IST

It is time that Dada moves to the Rashtrapathi bhavan. He has ruined
the economy. He only blames others and misleads
the nation saying that all is well.

from:  P.Tauro
Posted on: Jun 13, 2012 at 06:43 IST

Total policy paralysis and indecisiveness of the UPA government has caused this disaster.
All the positive energy created in early 2000s have vanished into thin air.

from:  Swarna
Posted on: Jun 13, 2012 at 05:27 IST

Part of the reason for this economic downturn, sources from inside
the finance ministry say, is the civil society's relentless pursuit
to get rid of corruption. Without corruption, industrialists cannot
get around the thoughtless and maze-like governmental regulations to
make profits. Corruption is the oil which lubricates the economic
machine in India. Does reining in the Reddy brothers have something
to do with dismal performance of mining? It certainly must have sent
wrong signals to all private mine owners. Babus are afraid to spend,
when their income sources are beginning to dry up. With independent
investigators listening in to the conversations between the rulers
and industrialists, we lost the enabling environment to do business.
How can anybody do business when cheating and corruption are done
away with? For one, I am pulling my money out of India. "Tongue in
cheek"

from:  Hemachander
Posted on: Jun 13, 2012 at 04:37 IST

Well, I can predict the future, actually I can show it.
Simple look at U.S. Buy foreign manufactured goods make laws that
hurts themselves.
But there is a little difference, in US, they develop the technology
and get it manufactured abroad, in India we only Buy from Abroad (read
Abroad as China). So Future will be even worse, coupled with bad
infrastructure, Corrupt leaders crazy neighbors and over population.
Its a recipe for disaster.
USA is smart, they'll fix it, but what about India ?

from:  vignesh
Posted on: Jun 13, 2012 at 02:45 IST
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