The index of industrial production (IIP) data released by the government on Tuesday may provide some relief along with growing concern over the weakening macro economic situation, as India’s industrial output growth slipped again in June from last year, but improved from the six-year low hit in May. However, Indian corporates continue to have an optimistic view going ahead.
Says Rana Kapoor, founder and CEO, Yes Bank, “There is no need to worry as this data is fluctuating and the investment in the capital formation continue unabated. Investment in the capital form should ensure a growth rate of 7.5 to 7.75% in the current fiscal,” he adds.
The index of industrial production (IIP) stood at 269.1 in June as against 255.3 in the same month a year ago. This translated into a year-on-year growth rate of 5.4% in industrial production versus 8.9% in June 2007.
VN Dhoot, chairman, Videocon Industries told FE, “India has now become part of the global system and in comparison to what is happening worldwide, India is doing better. Since the economy is growing at the rate of 78%, there will be more people, professionals required in the industry. Hence, I do not feel that surging inflation will depress the hiring prospects in India. We, at Videocon, are not facing any such issues. Since the government has adopted corrective measure in terms of taxation and with the economy growing at 8%, the next six months should see a better situation.”
However, Sajjan Jindal, vice-chairman and MD, JSW Steel Ltd, and Assocham president is of the view that it is now a matter of serious concern. Even if industry is accorded to the best possible packages in terms of incentives and concessions, the GDP growth is unlikely to be close to 9%. “We would be lucky if India achieves a GDP growth of 8% as in first quarter of current fiscal, since industrial production has suffered heavily,” adds Jindal.
However, Sunil Khandelwal, CFO, Alok industries was optimistic enough and said, “This is not the impact of the last one or two months, it takes time for the production to catch up. However, I don’t think there will be any material slowdown and in the next 6 months I definitely see growth ahead.”
Manufacturing growth in June was 5.9% compared to 9.7% in the corresponding month a year earlier. Mining sector growth stood at 2.9% in June as against 1.5% in the same month last year. Electricity growth was 2.6% versus 6.8% in June 2007, the government data disclosed on Tuesday.
