Industry and chambers on Wednesday expressed concern over the slide in IIP numbers and attributed it to the “fragility of present industrial activity in the country.”
The bodies demanded immediate government intervention, restoration of stimulus package, cheap credit and restraint on the part of RBI with regard to its monetary policy.
Assocham President Dilip Modi maintained that the year-long hyper inflation had resulted in rising input prices which had not only eroded profit margins but also reduced incentives for expanding industrial activity. The rising cost of credit on account of hardening interest rate had also affected industrial performance.
FICCI Secretary General Amit Mitra hoped that the Finance Minister would take into account the latest trend while formulating the budget for 2011-12 and restrain from initiating any further measures aimed at tightening the monetary policy.
CII Director General Chandrajit Banerjee said that the dip in IIP numbers should make the RBI cautious in aggressively tightening its monetary policy.
PHD Chamber President Salil Bhandari said that the fall in industrial production on a sequential basis was due to the continued rise in prices and high interest rates which had impacted demand for consumer goods.