The Hindu Business Line : Chidambaram sees no evidence of investment slowdown

New Delhi, Sept. 13 The Finance Minister, Mr P. Chidambaram, on Thursday asserted that there was no evidence of slowdown in investments in the economy and expected industrial production to gain momentum on the back of higher consumer demand during the upcoming festive season.

This positive outlook came a day after the Government pegged industrial production growth in July 2007 at 7.1 per cent, the lowest since October 2006, when it slumped to 4.4 per cent. The industrial output performance in July 2007 was also lower than the downwardly revised growth of 9 per cent for June 2007.

“No conclusion can be drawn from one month’s figures. IIP (Index of Industrial Production) figures for July are disappointing, but do not read too much at this stage. My outlook is still positive. This year too we shall report high growth. There is no evidence of slowdown of investment,” Mr Chidambaram told reporters after a meeting of the Union Cabinet here on Thursday.

Keeping tab

The Finance Minister said that the Government was trying to ascertain whether there was a demand issue or whether there was a cutback in production. “Except in two sectors including automobiles, there has been no cutback. Besides, with the busy and festival season starting now, it is reasonable to think demand will pick up,” he said.

Stating that he had written to the Prime Minister, Dr Manmohan Singh, that there was no evidence of slowdown in investments, Mr Chidambaram highlighted a RBI study of August 2007, which showed that capital investment plan for 2007-08 would be Rs 1,48,207 crore as compared to Rs 1,25, 240 crore in the previous year.

Kamal Nath optimistic

Meanwhile, commenting on the IIP numbers for July, the Commerce and Industry Minister, Mr Kamal Nath, told reporters on the sidelines of a trade conference that the slowdown in industrial growth was not that much a matter of concern.

Mr Nath highlighted that contraction of credit had hurt demand for consumer goods. He expressed optimism that the 12 per cent manufacturing growth target for 2007-08 will be achieved.

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