Tuesday, March 18, 2008

FICCI concerned over slowdown in manufacturing sector

by Jo Black

Expressing concern over the continuous slowdown in the manufacturing sector, FICCI said that the adverse impact of high interest rate has brought down the growth of consumer durables sector which has restricted the manufacturing sector’s growth. Unless strong measures are taken to make the bank credit for consumer durables more affordable the slowdown in manufacturing sector will continue, emphasised FICCI.

While the Finance Minister has given some concessions in the budget to prop up the consumer spending in the economy but the results of this measure would only be seen some time later. Even this may also not completely reverse the slowdown, pointed-out FICCI, and perhaps some monetary measures would be required to bring down the cost of credit for both the industry and the consumer.

FICCI observed that for the last two quarters of July-September and October-December 2007, manufacturing sector witnessed a slowdown and the main reason behind the slowdown is the negative growth of consumer durable sector for the period April-Jan 2007-08. The slowdown in electricity generation and the capital good sector in the month of January 2008 is also a cause for worry for the manufacturing sector. The slowdown in power generation could constrain the growth of manufacturing sector in the coming months, FICCI said. The current slowdown would make it difficult to increase the share of manufacturing in our economy from the current 16% to 25%, observed FICCI.

 

 

 

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