New Delhi: The industrial production has unexpectedly dropped to minus 3.5 per cent as compared to just 4.1 per cent in February. This is the first time since October 2011 that the output has turned negative with a huge fall in manufacturing and capital goods.
The falling industrial numbers is likely to have some major impact such as policy paralysis in the government and a negative sentiment in stock markets.
Apart from these, the manufacturing sector is also likely to see job losses. Going by the output, there is also less scope for interest rate reduction in June.
However, controlling inflation, crude oil prices and implementing economic reforms are the possible key to recovery in this case.
The sentiment is slated to remain weak till April numbers show a turnaround.
Reacting to the development, the government has called an emergency meeting next week.
Union Commerce Minister Anand Sharma said, "I have urged the RBI for a differential rate of credit for manufacturing. Credit should be available at affordable rates for industry. We will be taking a stock-taking exercise of all export promotion councils on May 17."
"We will convene Board of Trade meeting on June 1 and Government-Industry Task Force meeting will also be convened," he further said.
Meanwhile, Union Finance Minister Pranab Mukherjee and Prime Minister Manmohan Singh's Economic Advisory Council chairman C Rangarajan have said that the numbers are disappointing.
Pranab has blamed the slowdown in West and domestic economy for the contraction.
He said, "The figures are disappointing. RBI's monetary policy easing will take some time to translate into reduction in interest cost. The continued weak global sentiments are also affecting the Indian economy."
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