Expressing concern over the drop in industrial output, Reserve Bank of India Deputy Governor Subir Gokarn, on Friday, said the slow growth rate could be on account of the decline in industrial production.
Addressing the media, after an interactive session organised by the Confederation of Indian Industry (CII) Southern Region here, Mr. Gokarn said the efforts to moderate inflation could have led to the slowdown in industrial growth.
He was commenting on the drop in industrial output, which had contracted by 3.5 per cent in March as compared to last year. Mr. Gokarn said the growth rate came down from 8.5 per cent to sub-7 per cent during the last fiscal and many considered this to be the new growth trend for the country.
About the relevance of Index of Industrial Production (IIP) numbers, he said the numbers alone did not influence anything. Still, these numbers were a matter for concern as the rupee continued to be volatile. The RBI, he said, would continue to make all efforts to curb volatility in the foreign exchange market.
During the interaction, Mr. Gokarn said global economic conditions were likely to be challenging for sometime to come. He said the inflation rate had moderated from 9 per cent to 7 per cent, primarily because the growth had slowed down. The first major challenge would be the continuing inflation and the second challenge would be rising oil prices.
CII Southern Region Chairman G. V. Sanjay Reddy said the confederation would advocate growth of Southern India since this part of the country had been contributing 22 per cent to GDP (gross domestic product) and 28 per cent of the employment. CII Karnataka Chairman L. Krishna was present.
