Industrial growth sunk to a worrisome 5.3 per cent in November 2007, triggering concerns about sustainability of high economic trajectory in the wake of a possible slowdown in manufacturing. Latest official data released showed that the Index of Industrial Production (IIP) fell from a high of 15.8 per cent in the same month last year as manufacturing production nosedived to 5.4 per cent from a robust 17.2 per cent growth.
While economists felt the fall in industrial growth was a matter of concern and could be due to a combination of a persistently rising rupee and monetary tightening, the government exuded confidence that it would pick up in the coming months.
"I don't see this as a slowdown. I see this as signal to relook at consumer spending and may be loosening at bit (of monetary policy)," Commerce and Industry Minister Kamal Nath said.
Prime Minister Manmohan Singh recently constituted a high-powered group headed by National Manufacturing Competitiveness Council (NMCC) Chairman V Krishnamurthy to suggest measures to ensure continuing growth of a manufacturing sector that has shown signs of a slowdown in recent months.
The group will suggest immediate steps to boost exports of manufactured goods.
On a cumulative basis, industrial production fell to 9.2 per cent during the April-November period as compared with 10.9 per cent in the corresponding period of the previous year.
Economist TK Bhaumik said, "It is a matter of concern, although I would say that one should not read too much into monthly growth fluctuations. The drop in infrastructure growth is more a matter of concern."