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The sharp fall in Index for Industrial Production (IIP) in October had a mixed response from India Inc as it expects the falling inflation rate to instigate the RBI to reconsider its rate hike policy in the forthcoming Mid-Quarter Review on Friday.
Consumer goods
Mr Venugopal Dhoot, Chairman, Videocon Industries, said the drop in consumer goods output reflected in the IIP numbers was largely due to the high base effect as the sector had registered a growth of 14 per cent in the corresponding quarter last year.
“There is nothing to alarm with the IIP numbers. Project investments are still happening and the economy is progressing. Though high interest rate is a concern, we expect it to come down by 2-3 per cent in next one year with moderation in inflation,” he said.
Capital goods sector
The capital goods sector, which recorded a fall of 25.5 per cent in October against a growth of 21 per cent last year, appears to be not so hopeful of a turnaround.
Mr A.M. Naik, Chairman and Managing Director, Larsen & Toubro, said the capital goods sector is facing serious challenges and unless the Government comes out with some serious policy decisions and creates a level-playing field, specifically relating to Chinese imports, especially in the power sector, the industry is bound to suffer.
Mr Sorab Agarwal, Executive Director, Action Construction Equipment, said the best way to tackle inflation and the slowdown is to increase supply. However, today capex spends are not happening and buying power has dropped as bank funds have become expensive. To top it all, the rupee has depreciated so much that even Chinese imports have become expensive.
Last week, the Government revised its growth projection for the economy in 2011-12 downward to 7.5 per cent from the earlier forecast of around nine per cent in the pre-Budget Survey.
Steel industry
Mr Anil Agrawal, Managing Director, ReadyMade Steel, said the industry expects a revival in next quarter which is usually considered a busy season for infrastructure companies as the Government-sponsored projects are speeded up to utilise the funds allotted before the fiscal ends.
“Much will depend on the demand from infrastructure projects even though the cost and availability of raw material remains a concern. Some of small and medium industries are operating at just 70 per cent of their capacity,” he added.
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