The government has released the Index of Industrial Production (IIP) figures for the month of May. As per the data the industrial production grew at a rate of 2.4 % in May from the same period last year. The May IIP figures have also beaten expectations of 1.8 per cent.
IT IS also higher than the negative (-) 0.9 per cent in April, a number that was revised downwards from the earlier 0.1 per cent. Commenting on the May IIP data, industry body FICCI described it as a modest growth rate. “The May IIP figure of 2.5% perhaps indicate that the growth had bottomed out by April when there was a negative growth as per the revised figures. Industry is eagerly awaiting the implementation of some of the announcements being made in the last few weeks by the government to scale-up this modest growth achieved in May,” said RV Kanoria, President, FICCI in a release.
The industry body pointed out that the growth in manufacturing is not broad based as only twelve out of twenty two sectors have shown positive growth and major sectors like capital goods, chemicals, apparels continue to register negative growth month after month.
Expressing its expectations from the RBI's credit policy review due in the last of this month, FICCI said that the central bank should bring down the key interest rates further by at least 50 basis points.
However, seeing the slight improvement in the industrial production the RBI may not alter the current rates as there is inflationary pressure in the system and the monsoon is not up to the expectation, which can later on add to the inflationary pressure.
The industry lobby group repeated its demand that the government should take some bold decisions on reforms in areas like decontrolling diesel price, reducing fiscal deficit and encouraging foreign investments to uplift business sentiments.