New Delhi: Most of country's major financial institutions as well as the industrial world have blamed the hike in the interest rates for the low industrial production. They have also warned that if the Reserve Bank of India (RBI), in the first half of the coming month, further increases the rates then it will result in dismal impact on the  industrial sector.

In February 2011, mere 3.6 percent increase in the industrial production was recorded as compared to more than 16 percent profit in industrial output a year back.

Witnessing the current inflation rate, experts opine of another interest hike by the Central government. To a great extent, the mining sector is being held responsible for decline in the production figures. If seen from an angle of consumption, then a decline of 18.4 percent has been registered in capital goods. This has negated the profit of 11.1 percent increase in the capital goods industry.

Creating a major cause of concern for the industrial world is the loss registered in the area of basic goods as well in the last couple of months. Dr. Rajiv Kumar, Director General of FICCI said, “The continuous assistance of monetary policy to curb inflation has had an adverse effect on the industrial output. And if this persists, then the investment sector of the country will also come in the ambit of loss.”

Deputy Chairman of Planning Commission Montek Singh Ahluwalia has accepted the decline in the industrial output as a cause of concern but dismissed the fact that this might hamper the GDP growth rate. According to him, the loss incurred in the industrial sector can be recovered from a surplus in agricultural production.

JPN/Bureau