Expressing disappointment over industrial production contracting by 1.9 percent in February, India Inc today demanded an immediate cut in lending rate by the Reserve Bank to boost the economy.
Industrial production once again slipped into negative territory and contracted 1.9 percent in February due to poor performance in manufacturing, especially capital goods.
"The return of industrial production to the negative territory is extremely disappointing and is much below the expected industrial potential," CII Director General Chandrajit Banerjee said.
"We hope that the RBI would take note of the alarming industrial growth situation and start an easing cycle on the interest rate front. At this moment, waiting for the next monetary policy review might not be required," he added.
Factory output as measured by the index of industrial production (IIP) showed a decline of 0.1 percent during the 11-month period from April to February, compared with growth of 0.9 percent in the corresponding period a year earlier.
"High borrowing costs coupled with increased cost of production in terms of rising wages, cost of raw materials, energy and fuel cost choked the growth of industry," PHD Chamber President Sharad Jaipuria said.
Manufacturing, which constitutes over 75 percent of the index, declined 3.7 per cent in February as against growth of 2.1 per cent in the same month a year ago.
"Such a steep fall in manufacturing disproves that growth has bottomed out. Both consumer demand and investment conditions seem to be weakening thereby further dampening the outlook for manufacturing," Ficci Director General Arbind Prasad said.
Assocham President Rana Kapoor said: "The situation with regard to manufacturing is pretty serious, underscoring the need for a strong and decisive government which should take some major steps to lift the sentiment."
"The government must accord top priority to the revival of the manufacturing sector by setting up a high-level monitoring group under the Prime Minister to review the situation every month," he added.
Production of capital goods, a barometer of demand, shrank 17.4 percent, in sharp contrast to an expansion of 9.1 percent in the same month in 2012.
Overall, 13 of the 22 industry groups in manufacturing showed negative growth in February as compared to the corresponding month of 2013.