Amid concerns of a slowdown in the automobile sector, Minister of Heavy Industries and Public Enterprises Praful Patel on Wednesday once again pitched for a stimulus for the beleaguered sector. “There is a case (for a stimulus) and if we do not revive the industry, it will be a setback. Jobs have been lost due to the slowdown and volumes have come down,” he said at the annual SIAM (Society of Indian Automobile Manufacturers) convention.
“I am talking to the Ministry of Finance for a stimulus package all the time. We need some solution that can be found immediately as new buyers are not coming in,” Patel said. A delegation of the industry is now expected to apprise Prime Minister Manmohan Singh and Finance Minister P. Chidambaram.
Not everyone in the industry is hopeful that a stimulus will come through especially when the Government needs every bit of revenue. The fiscal and current account deficits are spinning out of control and a stimulus package will be yet another expensive payout.
It was different in 2008 when the Government’s finances were a lot stronger and it could afford to give a stimulus. The move paid off and sales soared bringing the auto industry back on track.
Patel admitted that there was “lots of pessimism” about the state of the economy with the Government not entirely in control of the situation. This has been a sore point with the industry, which believes the slowdown is a result of poor policy and could have been easily averted.
The last few months have been extremely difficult for automakers as they grappled with a steep fall in sales across vehicle segments. In addition, they have had to lay off contract workers at some plants which could lead to strikes and protests.
The Minister, in his parting shot, said it was time for SIAM to help the Government understand the definition of SUVs better. This vehicle category has been in the eye of a storm lately when it was slapped with higher excise duties and, as a result, sales have taken a beating.