New Delhi: At a time when the country is facing severe heat of inflation, India’s industrial output recorded its slowest pace in two years as it touched 1.9 percent in September. However, its pace has remained slow from January this year, the current scenario is more worrisome as it provides further evidence of deceleration of the economy.

Moreover, if the slowdown continues then it will not only limit the industrial production to 6 percent but will also have adverse effect on the gross domestic production.

As per the figures measured in terms of Index of Industrial Production (IIP), released on Friday, mining industry with its poor output of only 5.6 percent, stood as the major contributor for this dismal performance. Even during the festive seasons, the industrial production had shown no signs of improvement.

Moreover, the poor outputs of capital goods and non-durable consumer goods resulted in the bleak performance of manufacturing sector with only 2.1 percent growth rate. The auto industry also played a crucial role in further depleting the state of the manufacturing sector.

C Rangarajan, Chairman, Economic Advisory Council to the Prime Minister of India expressed his concerns over the slow-down in industrial output amidst the challenges of inflation.

According to the industrial experts, the interest rates hiking policy of the Reserve Bank has contributed in slowing the pace of the industrial sector.

However, Montek Singh Ahluwalia, Deputy Chairman of Planning Commission holding a different opinion said that the slowdown is not the result of interest rate hike. “There is no connection between high interest rate regimes and decline in industrial output growth”, he said.

Witnessing the decline in industrial production, the industry regulating associations including FICCI and CII has demanded relaxation in the interest rates by the Central Bank.

The Reserve Bank has hiked interest rates 13 times since March, 2010, to tame inflation.

JPN/Bureau