Industry growth sinking in abyss: PHD Chamber
New Delhi: The steep fall in IIP in October 2011, with growth rates declining sharply to (-) 5.1% as against 11.3% in the same period last year is an indication of severe slowdown prevailing in India’s industry sector.
In fact, the industrial growth has significantly decelerated in the current fiscal with growth rates declining sharply to 3.5% in Apr-Oct 2011 period as against 8.7% in the same period last year.
The major impediment has been the spiral in its input costs including high borrowing costs, shooting energy costs and flaring up of manpower costs. These have culminated into high cost push inflation scenario in the sector, retarding its output. This can pose a major jolt to the Indian growth story, going forward, said Mr Salil Bhandari, President PHD Chamber in a press release issued here.
The growth of real GDP during Apr-Sep 2011 has been estimated at 7.3% as compared with the 8.6% growth in the corresponding period last year due to lacklustre performance of the industry sector.
The lackluster performance in this sector, especially driven by the slag in manufacturing, has its socio economic implications in the form of over dependence on agriculture for livelihood, disguised unemployment and urban unemployment. For a country with the largest young population in the world, this creates a challenge of significant magnitude, Mr Bhandari pointed out.
The working age population is growing faster than the overall population; however, demographic dividend will flow if, we are able to find jobs for the growing labour force, he said.
The new National Manufacturing Policy aims at raising the share of manufacturing in GDP from 16% to 25% and generating additional employment of 100 million by 2022. However, to exploit the full job potential, we need to liberalize our labour laws and employment regulations, Mr Bhandari added.
It is discouraging to note that the manufacturing sector, which accounts for more than 75% of industrial production, has witnessed a (-) 6% growth in Oct 2011 as against 12.3% growth experienced in Oct 2010. Cumulatively, manufacturing has also significantly decelerated from near 9.4% in Apr-Oct 2010 to about 3.7% in Apr-Oct 2011.