The steep fall in industrial production, with growth rates once again dipping into the negative territory, this time the fall being even sharper than that experienced in October 2008, is a cause for concern. This shows that the impact of global economic meltdown has been much more than anticipated earlier and this is causing apprehension within industry about the times to come. What is particularly worrisome is that the manufacturing sector is in the red with a contraction of 2.5 per cent in factory output indicating that the sector is fast losing momentum on account of high interest rates, non-availability of credit and subdued demand conditions both in the domestic and export markets.

It is also disconcerting to note that major segments of manufacturing sector-intermediates and consumer goods- are showing negative growth rates. This is causing concern about the medium term growth prospects of this sector. The core sector has also matched the subdued growth rates experienced by industry. Electricity generation, which has ratcheted up a meager growth rate of only 1 % as compared to 5 % last year, is equally disheartening considering how dependent our industry is on availability of power. All this leaves us in no doubt that the industrial performance remains dismal during December 2008.

In this backdrop, it has become imperative to rejuvenate industry by contemplating bold demand inducing measures. The Chamber would advocate more public investment in infrastructure and skill development. Ensuring adequate credit availability to industry at reasonable rates is a priority to boost demand and reduce production costs in industry. Rationalization of taxes and a special incentive package for sectors worst affected by the slowdown is also necessary to stimulate demand. Reforms in agriculture are also important to invigorate rural demand. We hope that the third stimulus package, anticipated shortly, would address the genuine concerns of industry and help to pull the sector out of crisis

Anjula Singh Solanky
Dy. Secretary-Media Relations
PHD Chamber of Commerce and Industry