CII concerned about Indian manufacturing sector being in the red

The Confederation of Indian Industry (CII) has expressed its concern over the manufacturing sector continuing to be in the red for the fourth consecutive month, and worry over the decline in investment and consumption demand.

While welcoming news of January IIP data entering the positive terrain after three consecutive months of negative growth based on the improved performance of the electricity sector, CII Director General Chandrajit Banerjee, however, said: "What is extremely worrisome is that the decline in investment and consumption demand is showing no signs of reversing, which could stem the downtrend and trigger an upturn in investment cycle."

"The weak demand conditions, if allowed to persist, would make it difficult to even realise the growth predictions made in the advance estimates for the year," he added.

He further states that CII anticipates a pick-up in industrial production as downside risks are gradually receding on account of the growth inducing policy initiatives taken in the interim budget, the recent measures related to fast tracking project clearance and election related spending by political parties which should contribute to demand revival.

Banerjee said CII welcomes the decline of CPI based inflation to 8.1 per cent for the month of February 2014.

"This should spur the RBI to give a predominance to growth and cut interest rates in its forthcoming monetary policy as the negative growth of capital and consumer goods especially consumer durables reinforce the view that escalating interest costs are impeding investment revival," he said.