The performance of the industrial sector, which has shown a moderate improvement by registering a growth of 7.1 per cent during the month -a notch higher than 5.4 % in June 2008 and 5.2 per cent during the first quarter of the year- is a source for optimism for industry. This underscores the resilience of our industry to bounce back despite high commodity and oil prices, rising cost of credit and rapidly slowing down western world. This also shows that the growth story still remains strong and our economy is not too badly off on account of external developments according to PHD Chamber.

What is encouraging is the output of the capital goods sector which has achieved double digit growth rate (21.9%) as compared to 12.3 % in the same period last year, indicating that new investments are very much on the horizon despite the adverse conditions. Similarly, the output of consumer durables, at 11.2 % as compared to 2.7 % is also encouraging considering how sensitive the sector is to rise in interest rate.

According to PHD Chamber, despite the above, there is no denying the fact that the underlying numbers remain weak. The growth in industrial production is much below the 8.3 per cent recorded a year ago. Similarly the performance of manufacturing remains is tepid as compared to last year due to slackening demand conditions. Electricity generation, which has ratcheted up a meager growth rate of 4.5 % as compared to 7.5 %, is equally disheartening considering how dependent our industry is on availability of power.

Against this backdrop it has become imperative to rejuvenate the industrial sector by providing an impetus to growth. We should seize this opportunity to address our constraints and tackle both industrial slowdown and high inflation. Availability of raw materials and credit at reasonable rates is a priority to boost demand and reduce production costs in industry.  Besides, the government should broadly press ahead with the second round of reforms-infrastructure and skill development. Enhancing the efficiency of public investment is also of utmost importance. Moreover, the RBI should refrain from further monetary tightening measures to reduce liquidity in the system.