Concerned over the rising inflation in the country, India Inc has said the Government must immediately address supply side bottlenecks to contain the consumer price inflation. The consumer price index (CPI) or retail inflation for the month of October accelerated to 10.09% from a year earlier. The rise in inflation has been primarily driven by food article prices, which accelerated to 12.56% against 11.44% in September due to the supply disruptions resulted from heavy monsoon and poor storage facilities in the country.
CII Director General Chandrajit Banerjee, emphasized high retail inflation a threat for domestic economic recovery and expressed need to address structural issues, which are creating supply side hurdles in the way of growth. Assocham Secretary General D S Rawat said that despite a good monsoon in current year, high inflation around 12 percent inflation in cereals and around 45 percent in vegetable prices is quite surprising and disgusting. Terming the escalation in the CPI inflation a worrying factor for India, President of PHD Chamber of Commerce Suman Jyoti Khaitan said that high inflation is due to the severe problem in supply side management as production is not reaching consumers' doorsteps easily, thus it can be tackled only by easing supply side constraints and improving infrastructure rapidly. Further, rising inflation has also become an issue for the reserve bank of Indian (RBI), which has been increasing repo rate over the past few months in order to trim inflation as it has been eroding consumers and business confidence in the country.
Referring to the industrial production, India Inc has said that 2% rise in industrial output was not enough to conclude that recovery is on the cards as manufacturing growth would remain subdued in coming months. Indian industrial production (IIP) grew by 2% at 166.3 in the month of September over the corresponding month of previous year with capital goods production, a barometer for investments in the economy, witnessed a contraction of 6.8% at 231.7 for September as against 248.7 in the same month of the previous year. FICCI President Naina Lal Kidwai said Indian manufacturing sector is likely to witness subdued growth in the October-December quarter of current fiscal particularly due to the concerns over high interest rates and current slowdown in domestic demand. Suman Jyoti Khaitan, the President of PHD Chamber of Commerce, said that negative growth in capital goods indicates that investment cycle in the country is still in the fragile territory, which needs to revive with reduced costs of funds by rate cut and reduced costs of doing business by improving regulatory environment.
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