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Updated: April 12, 2012 15:45 IST

Pranab promises steps to revive industrial growth

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Finance Minister Pranab Mukharjee leaves the Prime Minister's Office after a Cabinet meeting on Thursday. Photo: R.V. Moorthy
Finance Minister Pranab Mukharjee leaves the Prime Minister's Office after a Cabinet meeting on Thursday. Photo: R.V. Moorthy

Attributing the “disappointing” industrial growth performance to tight monetary policy and global factors, Finance Minister Pranab Mukherjee on Thursday said the government and the RBI will take steps to revive growth.

“These (Index of Industrial Production) figures will have bearing on monetary policy announcement scheduled for next week. The government along with RBI will take required steps to revive activity in the economy,” he told reporters in New Delhi.

Mr. Mukherjee was commenting on the IIP data which revealed that industrial growth rate slipped to 4.1 per cent in February from 6.7 per cent a year ago. During April-February 2011-12, IIP slipped to 3.5 per cent, as against 8.1 per cent a year ago.

He further said that “uncertainty in the global economy coupled with monetary tightening in the past have impacted investment recovery”.

The RBI, which had raised interest rates 13 times since March 2010 to contain spiralling inflation, is yet to reverse its decision though the price situation has improved considerably. It kept the rates unchanged in its policy reviews in December 2011 and February 2012.

The RBI is scheduled to announce the credit policy on April 17, 2012 amid demand for cut in short-term lending (repo) rates.

On the revision of IIP figure for January 2012 from 6.8 per cent to 1.14 per cent, Mr. Mukherjee said, “This is disappointing... the revival in manufacturing in the last quarter of 2011-12 has not materialised as anticipated.”

Mr. Mukherjee attributed the negative growth in the consumer goods sector to considerable moderation in domestic demand.

The consumer goods sector output declined by 0.2 per cent in February as against a robust growth of 13.4 per cent in the corresponding period a year ago.

However, on the positive side, he said, capital goods output for February 2012 showed an expansion of 10.6 per cent on back of domestic investment recovery.

The good news for this year, he added, “is strong performance in electricity sector which has recorded a growth of 8 per cent in April-February (2011-12) period as against 6 per cent in same period last year.”

During February, output of the manufacturing sector, which constitutes over 75 per cent of the index, rose by just 4 per cent in February, compared to 7.5 per cent in the same month in 2011.

Industry has been blaming the slowdown in growth to the high interest rate regime that has made borrowings costly and curbed consumer spending.

Dear sir,I am actually addressing this comment to the Hon FM and also some of your Hindu's Sr editorial staff, like shri A.Seshan who had made very good comments/write ups on this FM's Budgets of 2011-12( Feb'2011) and 2012-13(march'12).The steps taken in last year's budget to lower the sr citizen age limit to 60 yrs from 65 for applicability under IT rules along with raising the IT exemption itself have now resulted in huge revenue deficits in this year as such steps extends to all those in PSUs and Companies,reducing the available source for the poor.There is no doubt about the longevity of age with improved health care,generic medicines at cheaper prices.This is also between 70 yrs and above and upto 90 or 95. The Govt should not be so liberal to grant a 20% increase in pension on completion of 80 years but shd concede only 1 to 2% each year beginning from 75 age? Raising the age of retirement to 60 yrs was another retrogade step denying the chance to younger is another blunder!

from:  c.g.venkatesan
Posted on: Apr 12, 2012 at 19:29 IST

Pranab Mukherjee,is converting himself into a "Murkh"[fool in
Hindi],by diverting attention and concentrating on things which are irrelevant on the diktat of the G-20,MNCs,The Word Bank and the IMF.He
has to,mainly concentrate on the Fiscal Deficit and forget
everything.Else India will be Bankrupted.For this,he has to reduce the
Government Expenditure and eschew borrowing from the International
Bankers.Else India is doomed.His keeping the Fiscal Deficit, at a very
HIGH,5.1% is ominous,as this rose to 5.9 in the last Fiscal against a
smaller Budgeted, figure.Hence will not the Fiscal Deficit be higher
at end of this Fiscal?
Lessen both expenditure and debt.Else Austerity of the Greek
type will be forced on Indians,due the fault of the "MURKH"!

from:  Sadasivan
Posted on: Apr 12, 2012 at 17:22 IST
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