NEW DELHI (Commodity Online): Reserve Bank of India's (RBI) anti-inflationary monetary policies to curb inflation in the country has slowed the industrial growth in the country, mainly in the second quarter of 2011-12 fiscal, according to a study conducted by the Associated Chambers of Commerce and Industry of India (ASSOCHAM).
The study covered over 6,352 companies in private sector and 133 public sector units and the analysis was based on the seven parameters – interest payment, net sales, investments, profit after tax, working capital, profit after tax to sales, and interest payment to profit before depreciation, interest and taxes (PBDIT).
According to the study, the net sales in second quarter of 2011-12 slowed down to 20.41% compared to 27.67% in first quarter. The highest decline was in public sector units – from 35.99% to 21.45%.
The industry body has suggested some policies to curb inflation and to improve the economic situation of the country.
- Encouraging industries to increase production rather than imports:- The depreciating rupee will particularly hit the industrial sector and put pressure on their costs as imports of oil, coal, metals and minerals and intermediate products will get costlier.
Thus import based industries should be encouraged to invest in manufacturing hubs.
- Fast-track clearances for pending infrastructure projects:- If large infrastructure projects are cleared, then a large fiscal support automatically gets introduced into the system without any burden on the Centre’s finances. And also allowing foreign direct investments in the pension sector to infuse long-term funds and help revive the economy while curbing inflation.
- Improve mining and manufacturing sectors:- mainly the mining of resources like coal, steel and iron ore as it will reduce dependency over imports and it will inturn create new employment opportunities and cut mounting current account deficit.
“The government should make investments attractive and invite long-term debt funds in the infrastructure sector.” said Dilip Modi, President ASSOCHAM
