{"id":8724,"date":"2017-04-21T15:18:51","date_gmt":"2017-04-21T09:48:51","guid":{"rendered":"http:\/\/patriotsforumindia.com\/?p=8724"},"modified":"2017-04-21T15:18:51","modified_gmt":"2017-04-21T09:48:51","slug":"indian-industry-is-on-life-support-and-the-governments-denial-of-this-isnt-helping","status":"publish","type":"post","link":"https:\/\/patriotsforumindia.com\/?p=8724","title":{"rendered":"Indian industry is on life support \u2013 and the government\u2019s denial of this isn&#8217;t helping"},"content":{"rendered":"<p>&nbsp;<\/p>\n<h1>Indian industry is on life support \u2013 and the government\u2019s denial of this isn&#8217;t helping<\/h1>\n<p>https:\/\/scroll.in\/article\/818854\/indian-industry-is-on-life-support-and-the-governments-denial-of-this-isnt-helping<\/p>\n<h2>Multiple indicators, from factory output to low demand for bank credit, show that the manufacturing sector is in the doldrums.<\/h2>\n<p><!-- MOBILE & TABLET ONLY META--><\/p>\n<div class=\"article-meta-container hide-for-large\">\n<address><a href=\"https:\/\/scroll.in\/author\/697\" rel=\"author\">Mayank Jain<\/a><\/address>\n<div class=\"article-time-container\"><time class=\"article-published-time\" datetime=\"2016-10-13T06:30:00+05:30\"> Published Oct 13, 2016. \u00a0 <\/time><\/div>\n<\/div>\n<p><!-- END OF MOBILE & TABLET ONLY META--> <!-- END OF ARTICLE HEADER--> <!-- ARTICLE IMAGE--><\/p>\n<figure class=\"featured-image\"><picture><img decoding=\"async\" src=\"https:\/\/d1u4oo4rb13yy8.cloudfront.net\/article\/kmfscyzqib-1466653520.jpg\" alt=\"Indian industry is on life support \u2013 and the government\u2019s denial of this isn't helping\" \/> <\/picture><\/figure>\n<p><!-- END OF ARTICLE IMAGE--> <!-- ARTICLE CONTENT--><\/p>\n<div class=\"article-content-container\"><!-- DESKTOP ONLY META & SHARING--><\/p>\n<aside class=\"article-meta-container large-3 columns show-for-large\"><!-- ARTICLE PUBLISHED & UPDATED TIMES--><\/p>\n<div class=\"article-time-container\"><time class=\"article-published-time\" datetime=\"2016-10-13T06:30:00+05:30\"> Oct 13, 2016.\u00a0\u00a0 <\/time><\/div>\n<p><!-- END OF ARTICLE BOTTOM SHARE SHEET--><\/aside>\n<p><!-- END OF DESKTOP ONLY META & SHARING--> <!-- ARTICLE RENDER FROM CMS--><\/p>\n<section class=\"article-content scroll-article-content normal-article-content large-6 columns\">\n<div class=\"article-body\">\n<p>Prime Minister Narendra Modi, riding to power on the promise of economic growth, launched his <a class=\"link-external\" href=\"http:\/\/www.makeinindia.com\/home\" target=\"_blank\" rel=\"nofollow\">Make in India<\/a> pet project in September 2014 to boost manufacturing and reduce dependence on imports.<\/p>\n<p>The project aimed to create more jobs by enhancing India\u2019s potential of becoming a <a class=\"link-external\" href=\"http:\/\/www.ndtv.com\/india-news\/digital-india-initiative-to-transform-country-says-ravi-shankar-prasad-1277675\" target=\"_blank\" rel=\"nofollow\">manufacturing hub<\/a>, specially for electronics, in the next three years.<\/p>\n<p>Two years on, however, the results of the government\u2019s push to industry have been lacklustre.<\/p>\n<h3 class=\"cms-block cms-block-heading\"><strong>The numbers talk<\/strong><\/h3>\n<p>In the last year, the index of industrial production \u2013 which measures the growth in various sectors such as mining, electricity and manufacturing by surveying data provided by companies \u2013 has declined steeply. As compared to 9.9% month-on-month growth in October 2015, there was a contraction of 0.7% in August (from July). This was the second consecutive decline in the index, which fell by 2.5% in July.<\/p>\n<figure class=\"cms-block cms-block-image \" data-embed-loaded=\"true\" data-width=\"1280\" data-height=\"720\"><picture><img decoding=\"async\" src=\"https:\/\/d1u4oo4rb13yy8.cloudfront.net\/btahcyukbo-1476266137.png\" alt=\"\" \/><\/picture><\/figure>\n<p>Though the <a class=\"link-external\" href=\"http:\/\/www.livemint.com\/Opinion\/yFIZO8b4StldxCMEuQXCPN\/The-way-forward-for-outofsync-IIP.html\" target=\"_blank\" rel=\"nofollow\">representativeness<\/a> of the index of industrial production has been questioned, a <em><a class=\"link-external\" href=\"http:\/\/www.livemint.com\/Money\/3fssc5cSHq3XP65ii7AnbP\/AprilAugust-industrial-growth-worst-in-a-decade.html\" target=\"_blank\" rel=\"nofollow\">Mint<\/a> report<\/em> on Wednesday said that the April-August performance is the worst in a decade \u2013 something the government cannot afford to ignore.<\/p>\n<h3 class=\"cms-block cms-block-heading\">Optimistic government<\/h3>\n<p>Despite these signs of a slowdown in industry, the commerce and finance ministries remain optimistic about India\u2019s growth potential. They claim that the falling exports and slowing industry data are going to stabilise in the near-term.<\/p>\n<p>\u201cAt the moment, the fall is arrested,\u201d Commerce Minister Nirmala Sitharaman <a class=\"link-external\" href=\"http:\/\/economictimes.indiatimes.com\/articleshow\/54787345.cms?utm_source=contentofinterest&amp;utm_medium=text&amp;utm_campaign=cppst\" target=\"_blank\" rel=\"nofollow\">said<\/a> on Monday after two consecutive months of falling exports. \u201cWe will only be looking at steady growth. It may be slow but steady.\u201d<\/p>\n<p>Before this, exports had declined for <a href=\"http:\/\/scroll.in\/article\/809818\/these-charts-explain-why-many-people-are-sceptical-about-indias-amazing-growth-figures\">17 consecutive months<\/a> before picking up in June.<\/p>\n<p>In September, Finance Minister Arun Jaitley insisted that the steel industry, reportedly the biggest contributor to non-performing assets of public-sector banks, was showing <a class=\"link-external\" href=\"http:\/\/www.thehindu.com\/business\/Economy\/arun-jaitley-on-major-source-of-nonperforming-assets\/article9115054.ece\" target=\"_blank\" rel=\"nofollow\">signs of a turnaround<\/a>. The month before that, he said India had defied the global slowdown and seemed <a class=\"link-external\" href=\"http:\/\/indianexpress.com\/article\/india\/india-news-india\/india-economy-defying-global-slowdown-poised-to-seize-opportunity-finance-minister-arun-jaitley-2960007\/\" target=\"_blank\" rel=\"nofollow\">poised<\/a> for high-growth on the back of services sector.<\/p>\n<p>However, recent data \u2013 including that from the Reserve Bank of India \u2013 contradicts these statements.<\/p>\n<figure class=\"cms-block cms-block-image \" data-embed-loaded=\"true\" data-width=\"1280\" data-height=\"720\"><picture><img decoding=\"async\" src=\"https:\/\/d1u4oo4rb13yy8.cloudfront.net\/xaqdihdoul-1476266154.png\" alt=\"\" \/><\/picture><\/figure>\n<p>The latest RBI data points to a slowdown in the manufacturing sector as its order books (where orders are registered) have declined year-on-year. A negative growth of 2.6% is projected for the last quarter of the 2016-&#8217;17 financial year from the last quarter of the previous fiscal year. In comparison, the 2015-&#8217;16 financial year had started on a high, with 10.2% growth in the first quarter of that year.<\/p>\n<p>\u201cThe demand conditions in the Indian manufacturing sector continued to remain subdued, as can be reflected from the trajectory of capacity utilisation,\u201d the RBI said in its monthly statement in September. \u201cOverall, Indian manufacturing sector did not appear to witness any turnaround, as indicated by the survey results.\u201d<\/p>\n<figure class=\"cms-block cms-block-image \" data-embed-loaded=\"true\" data-width=\"1280\" data-height=\"720\"><picture><img decoding=\"async\" src=\"https:\/\/d1u4oo4rb13yy8.cloudfront.net\/lwpymxgbia-1476266165.png\" alt=\"\" \/><\/picture><\/figure>\n<h3 class=\"cms-block cms-block-heading\">Outlook grim<\/h3>\n<p>A closer look at the index of industrial production numbers for the manufacturing sector paints an even grimmer picture. The manufacturing index of industrial production has been declining steadily and saw a negative growth of 4.7% growth in the first quarter of financial year 2016-2017.<\/p>\n<p>A <a class=\"link-external\" href=\"http:\/\/indianexpress.com\/article\/business\/banking-and-finance\/credit-growth-to-industry-below-zero-first-in-decade-bank-gross-3077842\/\" target=\"_blank\" rel=\"nofollow\">report<\/a> in the <em>Indian Express<\/em> on Wednesday said that bank credit or loans to the industrial sector had decreased by 0.2% year-on-year in August \u2013 slipping into negative for the first time in a decade.<\/p>\n<figure class=\"cms-block cms-block-iframe\" data-src=\"http:\/\/datawrapper.dwcdn.net\/PuY90\/1\" data-embed-loaded=\"true\" data-embed-type=\"iframe\"><\/figure>\n<p>An examination of the gross bank credit to the industry based on data from RBI\u2019s September monthly review (in the chart above) showed that credit to sectors like textiles, construction, petroleum and beverages declined between 1-7% in the current financial year.<\/p>\n<p>A massive 13.3% decrease in credit was recorded in the food processing industry, while chemicals, gems and vehicle industry received marginally more credit.<\/p>\n<p>While Jaitley has <a class=\"link-external\" href=\"http:\/\/timesofindia.indiatimes.com\/business\/india-business\/RBI-to-blame-for-slowdown-in-manufacturing-Arun-Jaitley\/articleshow\/45682497.cms\" target=\"_blank\" rel=\"nofollow\">repeatedly sought<\/a> a reduction in interest rates to boost the Indian economy and new RBI Governor Urjit aPatel <a href=\"http:\/\/scroll.in\/article\/818301\/urjit-patel-debuted-with-a-rate-cut-but-even-he-knows-your-emis-may-not-come-down-any-time-soon\">cut repo rates<\/a> by 25 basis points earlier this month, economists do not think this will fix the manufacturing sector. The repo rate is the rate at which the RBI lends to banks. A lower repo rate increases banks\u2019 access to credit and so should result in lower interest rates for customers.<\/p>\n<p>\u201cThe demand in the economy over the last couple of years has come down to a level that capacity utilisations are at around 75%,\u201d DK Pant, chief economist at India Ratings was quoted as saying by <a class=\"link-external\" href=\"http:\/\/indianexpress.com\/article\/business\/banking-and-finance\/credit-growth-to-industry-below-zero-first-in-decade-bank-gross-3077842\/\" target=\"_blank\" rel=\"nofollow\"><em>Indian Express<\/em><\/a>. \u201cIn such a scenario, no investor will invest and I don\u2019t think a cut in interest rate can fuel investment.\u201d<\/p>\n<h3 class=\"cms-block cms-block-heading\"><strong>No jobs<\/strong><\/h3>\n<p>Another objective of the Make In India program was to create more jobs for the burgeoning labour market in India (by creating a thriving industry), but that has not happened yet either. The annual report by the Ministry of Labour and Employment showed that unemployment in India rose to a <a class=\"link-external\" href=\"http:\/\/m.thehindu.com\/business\/Industry\/joblessness-rises-to-5year-high\/article9154766.ece\" target=\"_blank\" rel=\"nofollow\">five-year-high<\/a> at 5% in the 2015-&#8217;16, while the female unemployment rate was 8.7%.<\/p>\n<figure class=\"cms-block cms-block-image \" data-embed-loaded=\"true\" data-width=\"1280\" data-height=\"720\"><picture><img decoding=\"async\" src=\"https:\/\/d1u4oo4rb13yy8.cloudfront.net\/fufvbmafrh-1476266205.png\" alt=\"\" \/><\/picture><\/figure>\n<p>\u201cIn the manufacturing sector, growth has come predominantly from improvement in efficiency and not too much due to a rise in output, so the growth in employment is much slower,\u201d Proban Sen, former chairman, National Statistical Commission <a class=\"link-external\" href=\"http:\/\/www.thehindu.com\/business\/Industry\/joblessness-rises-to-5year-high\/article9154766.ece\" target=\"_blank\" rel=\"nofollow\">told <\/a>the <em>Hindu. <\/em>&#8220;Second, the pattern of employment in the corporate sector is changing. Companies are looking to hire productive workers so there is a reduction in absorption of labour.\u201d<\/p>\n<p>All this points to a difficult time ahead for the Indian industry and the Modi government would do well to acknowledge the problem rather than arguing over numbers, as Dinesh Unnikrishnan summed up in <a class=\"link-external\" href=\"http:\/\/www.firstpost.com\/business\/iip-contracts-again-modi-govt-is-dealing-with-a-problem-not-just-a-statistical-illusion-3044980.html\" target=\"_blank\" rel=\"nofollow\">this<\/a> <em>Firstpost <\/em>article:<\/p>\n<blockquote class=\"cms-block cms-block-quote\"><p>Clearly, there is no magic wand with finance minister Arun Jaitley<\/p><\/blockquote>\n<\/div>\n<\/section>\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p>&nbsp; Indian industry is on life support \u2013 and the government\u2019s denial of this isn&#8217;t&#8230; <a class=\"meta-more\" href=\"https:\/\/patriotsforumindia.com\/?p=8724\">more <span class=\"meta-nav\">&raquo;<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":8725,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[19,3],"tags":[],"class_list":["post-8724","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-articles-2","category-economy"],"_links":{"self":[{"href":"https:\/\/patriotsforumindia.com\/index.php?rest_route=\/wp\/v2\/posts\/8724","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/patriotsforumindia.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/patriotsforumindia.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/patriotsforumindia.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/patriotsforumindia.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=8724"}],"version-history":[{"count":1,"href":"https:\/\/patriotsforumindia.com\/index.php?rest_route=\/wp\/v2\/posts\/8724\/revisions"}],"predecessor-version":[{"id":8726,"href":"https:\/\/patriotsforumindia.com\/index.php?rest_route=\/wp\/v2\/posts\/8724\/revisions\/8726"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/patriotsforumindia.com\/index.php?rest_route=\/wp\/v2\/media\/8725"}],"wp:attachment":[{"href":"https:\/\/patriotsforumindia.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=8724"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/patriotsforumindia.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=8724"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/patriotsforumindia.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=8724"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}