Latest data released on Friday showed, that Industrial production contracted 1.9% in February, the worst performance since the 2.5% fall seen last May. The poor show was entirely on account of a 3.7% decline in manufacturing activity as consumer shunned purchasing white goods and even non-durables, resulting in a fall in production in both sectors.
Poor consumer demand has left companies with surplus capacity at their plants, which in turn has meant that they are not purchasing machinery. As a result, the capital goods sector saw a 17.4% decline in February. The data released by the ministry of statistics showed that radio, TV and communication equipment production declined nearly 27%, while office, accounting and computing machinery, furniture (14% each), the auto sector were the other poor performers.
Economists are worried that 2013-14 could be the worst year for the manufacturing sector since 1991-92 when economic reforms were ushered in. A weak industrial sector is one of the main reasons behind the economic slowdown with several companies now in distress.
As a result they are now delaying loan repayments and laying off workers to stay afloat. It is feared, despite the hiding by both of the minister ahead of election that continued run of poor numbers even during the fourth quarter is expected to keep the overall growth rate in the sub-5% region.
Ficci director general Arbind Prasad concluded, “Such a steep fall in manufacturing disproves that growth has bottomed out. Both consumer demand and investment conditions seem to be weakening thereby further dampening the outlook for manufacturing,”.
INDIA HONEST sees reasons behind the reluctance of many senior leaders including the economist prime minster Dr.Singh ,Chidambaram , Manish Tewari and many others to remain sidelined in the coming election.
Moreover the overall economy, CAD and the fiscal deficit is in worst shape , and the combined effect of this plus the apprehension of al nino , may put a huge burden on the incoming government to rebuild the economy and nation to a healthy shape.Thus the wise men including Annand Sharma and Chidambaram, opting for VRS were justified in their action.