Indian industry is still not out of the woods: ASSOCHAM

Business

oi-Sneha

By Sneha B K

Published: Tuesday, March 12, 2013, 14:58 [IST]

While the Industrial growth for January is being seen as better than expected, the ASSOCHAM reading is that the Indian industry is still not out of the woods. The capital goods sector, a key reflection of an investment scenario, is still in the negative zone though the extent of damage seems to have been contained at minus 1.8 per cent against minus 2.7 per cent in January last fiscal.

Consumer durables are still in trouble with a negative trend prevailing indicating a link between high interest rates and the demand depression. Though here also, the damage seems to have been checked somewhat because the minus trend has improved from (-) 7.5 per cent in January, 2012 to (-) 0.9 in January this year.

As many as 11 out of the 22 industry groups have shown positive trend, but the concern is that at least half of the industrial sub-groups are still battling. Under these circumstances, it can only be said with some positive bias that the worst seems to have been over.

But the industry needs a lifeline in terms of demand regeneration which will have to come from the Reserve bank of India through policy interest rate cuts, adds the ASSOCHAM.

"ASSOCHAM will urge the RBI not to get too much influenced by the Consumer Price Index (CPI) released today as the high CPI is a function of high food prices which are not influenced by credit supply. On the other hand, several segments like the automobile - commercial vehicles, cars, are bleeding," chamber President Rajkumar Dhoot said that CPI numbers which have been released today when it reviews the credit policy next. The CPI numbers are not the core inflation which is on a downward trajectory in term of wholesale price index.

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