No respite from industry slowdown till 2009 end: Economists

New Delhi, Dec 12 (PTI) India's industrial production
index, which contracted by 0.4 percent in October for the
first time in 15 years, will continue to show a slowing trend
till the end of 2009 with some chance of recovery later, feel
Indian economists.

Industrial output, as measured by the Index of Industrial
Production (IIP), decelerated sharply from a whopping 12.2
percent growth rate a year ago. Before this, industrial growth
was negative in April 1993.

Industrial slowdown is set to have ramifications for the
country's overall economic growth as well. The Prime
Minister's Economic Advisory Council Chairman, Suresh
Tendulkar, said the panel is taking a relook at GDP figures,
which it currently pegs at 7.7 percent for this fiscal.

"We are taking stock of the situation and we will revise
our forecast accordingly," he said.

Crisil Principal Economist D K Joshi said, "We expect
the IIP to continue to be weak till the end of the first half
of the next fiscal. It might become positive, but will not
recover till the end of this fiscal."

Joshi pointed out that certain 'abrupt situations'
in the country like credit not being available and
the uncertain global scenario could have caused the industrial
growth figures to get pushed into the negative zone.

The manufacturing sector, comprising around 80 per cent
of the Index of Industrial Production, clocked a negative 1.2
percent growth rate in the month from a whopping 13.8 percent
a year ago.

Output in intermediate goods and consumer goods shrank by
3.7 percent and 2.3 percent from a rise of 13.9 percent and
13.7 percent, respectively, in October 2007.

Joshi said he expected the Reserve Bank of India (RBI) to
announce more rate cuts. "There might be need for a rate cut,"
he said, adding that the government has to realise that just
increase in spending will not help in reviving (industry),
execution has to be there.

Meanwhile, hopeful that the recent fiscal stimulus
package announced by the government comes into effect soon,
ICICI Bank's Executive Director V Vaidyanathan said that the
steps taken by the government to spur growth would have a big
impact.

"The government has emphasised that it will do more
if required," he said.

On lowering interest rates further, he said that the
banking system is waiting for the interest rates to come down
and stabilise, adding that "we will continue to be interested
in lending to the auto, mortgage (and) SME businesses". PTI