With factory output in November 2014 growing at the fastest pace in 5 months, India Inc said the turnaround needs to be made consistent for a longer period and reiterated its call for a rate cut even as December retail inflation was below the RBI's 6 per cent target.
"We hope that going forward, the incipient signs of revival would transform into a firm recovery especially as there is some progress in investment intentions and business confidence is on the ascendant," CII Secretary General Chandrajit Banerjee said.
"The turnaround in industrial production in November needs to be made consistent for a longer period before we can see a secular growth in manufacturing. Efforts from the government and the RBI have to continue to unclog several sectors from environmental and other regulatory issues. Reduction in interest rates will be a major trigger," Assocham President Rana Kapoor said.
FICCI President Jyotsna Suri said: "While it is heartening to see the growth in manufacturing in November, however it does come over the negative base. There is a sense of optimism in the industry with the steps taken by the Government in the last few months...."
According to CII's Banerjee, demand creation has to be the priority along with a "major impetus" to manufacturing sector to steer the economy towards an accelerated growth path.
"For this, the government should put in place critical entrepreneur friendly reforms which would provide an investment push to the economy. Tax regime should be transparent, predictable and meet global standards," he added.
"Besides, the pace of reviving stalled projects should be stepped up, possibly with the support of states. The disinvestment process should be hastened and the proceeds be invested in infrastructure," Banerjee said.
CII said the marginal rise in retail inflation "should not prevent the RBI from cutting benchmark interest rates in its forthcoming monetary policy announcement and moving lockstep with the government to put the focus back on growth.
"This assumes importance as investments have not shown a significant pick up and consumer durables continue to show a muted performance," the industry body said.