It is an encouraging sign that industrial growth rate after remaining sluggish for a long time now registered an increase of 2.4 per cent in the month of January this year. In April last year it was minus 1.3 per cent.
In manufacturing sector the growth rate have gone up from 1.8 to 2.7 and in electricity sector from 4.6 to 6.4 per cent. But in mining the rate is gone down from 2.8 to 2.9 per cent. But such a trend cannot be considered as turning point from low to high performance. The high bank lending rates, downfall in exports and dwindling domestic demands have forced the industries to slow down the productions.
CII Chairman Mr.Adi Godrej has assessed that it would a long time to for the industrial growth to become 2 digit from the prevailing one digit position. The industry requires immediate cut of 25 basic point in the Bank rates. The industries have sustained losses and need urgent financial action. There is sharp decline in the export and domestic demands for machinery and electrical equipments. On March 19 the Reserve Bank of India will announce its decisions on bank rates in its quarterly review of monetary positions. The Governor Mr.Subba Rao may slash it ignoring the inflationary tendencies in the whole sale prices which have gone upto 6.89 per cent from 5.71 per cent.
The inflation in retail prices also increased from 10.79 to 10.91 per cent. The former Governor of Reserve Bank of India and presently Chief Economic Advisor to the Prime Minister Mr.C.Rangarajan has said that February 2013 whole sale prices index can be considered as ground for reducing the bank rate ratio. The Union Finance Minister Mr.P.Chidambaram also said that in view of fall of exports the domestic demands for the industrial goods must increase. At present the lending bank rates stand at 7.75 per cent.
It is too high in global situation. It is virtually economic onslaught in the industrial, business and overall commercial sectors. The Government is also making all out efforts to bring down fiscal deficit to 4.8 per cent in the current financial year which stands at 5.3 per cent. Under such distressing situation the 2.4 per cent increase in industrial sector in a very happy development and RBI must come forward with cut in bank lending rates to give financial support to capital starved industry.