Reacting to the latest figures on industrial production, apex industry chambers said the industrial performance was deeply disturbing.
The Index of Industrial Production for June at -1.8 per cent clearly points to deepening industrial slowdown, said the chambers, calling for immediate re-set of the policy matrix.
India can no longer afford to pursue a policy of deferred decision-making, said Rajkumar Dhoot, Assocham President.
He said the deep slide in the capital goods sector clearly reflected the secular drop in investment levels. “A deep cut in interest is essential,” he added.
The Confederation of Indian Industry emphasised on revival measures such as reduction in repo rates, quick implementation of fiscal consolidation plan and fast-tracking infrastructure projects.
“FICCI’s latest survey also shows that the growth in manufacturing is not likely to revive soon, at least not in the July-September quarter. Since export demand is also weakening, there is a need for stimulating domestic economy by taking bold decisions on reforms in areas such as decontrolling diesel price, reducing fiscal deficit and encouraging foreign investments,” said R.V. Kanoria, FICCI President.
FICCI also said there was a strong case for the RBI to cut interest rates at least by 50 basis points immediately.
“The decline in inflation presents an opportunity for the RBI to revisit its monetary policy stance. We need some fiscal stimulus, an easing of monetary policy and a set of policy reforms that would lift the overall business confidence level. A reduction in interest rates at this juncture would encourage entrepreneurs to revive their investment plans, which in turn would add to both growth and employment generation,” said the FICCI President.