Industrial growth is expected to remain below 5% for the next couple of quarters unless the pace of clearances for projects and input supplies improve and investment cycle picks up, says a report.
According to research firm Dun and Bradstreet, Index of Industrial Production (IIP) is likely to yield positive growth during the month of October this year partly due to low base and added that IIP growth is expected to remain in the range of 2.5-3.5% during October.
Industrial output in September contracted by 0.4% due to poor performance of the manufacturing sector and decline in consumer as well as capital goods output.
The industrial output growth rate turned negative in September after showing 2.3% growth in the previous month. IIP was 2.5% in corresponding month last year.
"While the contraction in external demand persists, the domestic demand also continues to moderate. These pose significant constraints to the industrial activity and revival of the investment scenario," Dun & Bradstreet India Senior Economist Arun Singh said.
The economic growth rate slipped to a nine-year low of 6.5% in 2011-12. The Reserve Bank had projected 5.8% growth rate for 2012-13.
Singh further noted that industrial production is likely to remain subdued in the near term and will gather pace depending upon how the government acts in terms of implementation of the announced measures coupled with initiating new ones.
"Appropriate and timely policy announcements and implementations at this stage are crucial to boost the overall sentiment and encourage the private sector participation. Clearances and fast tracking of infrastructure projects and ensuring a conducive business environment is vital for the revival of the industrial activity and hence the growth going ahead," Singh added.