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Posted on Nov 22, 09:04PM | UNI
Domestic industry has been thrown in a vicious circle where investment is declining fast and it is coupled with a contraction in consumer demand, necessitating some 'big initiatives' not only from the government but also from the Reserve Bank of India, Assocham said today.
An analysis of the Index of Industrial Production for September shows that close of a dozen sectors have seen massive drop in output as they found a big drop in consumer demand.
The overall trend is visible in worsening conditions in the capital goods sector, which saw a degrowth of 12.2 per cent in September this fiscal.
In fact, the sector which is a kind of index of the investment appetite in the industry has been in trouble for the last over a year. Even in September, 2011, the capital goods segment had witnessed a decline of 6.5 per cent.
"Instead of improvement, the capital goods sector has seen deterioration throwing a major challenge for the Indian economy," Assocham president Rajkumar N Dhoot said in a statement.
He also said what is even more worrisome is the fact that the manufacturing sector which is the biggest creator of jobs in the industry has slipped into the negative territory posing serious threat to the employment situation in the country.