Expressing the slowdown in May’s industrial output as ‘not encouraging’, Finance Minister Pranab Mukherjee said the government will take all necessary steps to enhance the productivity of the manufacturing sector. He said, "I do not always take into account the monthly and weekly figures as the real trend-setter. At least quarterly figures will have to be taken into account. Otherwise, there are problems, of course."
However, Finance Minister said, 'we are having discussion with various people, chambers of commerce and others and we are working out how to improve the manufacturing sector,' he added. The government also aims to increase the contribution of manufacturing to the GDP to 25% in coming years from about 16% at present.
India’s Index for Industrial Production (IIP) registered nine month low level of growth, this moderation in industrial output had raised the concerns of policy makers and industry. The industrial output rose to 5.6% in May from 8.5% in the same month of last year, and cumulative growth of IIP for April-May 2011 was at 5.7% from 10.8% in the same period of pervious year. This moderation in IIP is due to increasing interest rate and high inflation, combined with the volatility in global commodity prices. There is buzz in market that central bank will maintain its stance on inflation and another hike in the policy is expected on July 26.
On the issue of government borrowing, Finance Minister said, government will not expand its 2011-12 borrowing programme. Central government plans to borrow Rs 4.17 trillion in present financial year, out of which Rs 2.5 trillion scheduled between first half of 2011-12.