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Core Industries – The fuel for Indian Industrial Output

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Declining Indian Industrial Output

It is needless to say that the core Industries is India’s lifeline. The industries are slipping badly marking a threat to the economy. The Index of Industrial production shows a decline in several outputs like electricity. There has been shortage in coal and gas production, which is partly to be blamed for the shortfall in power generation for the first time in several years. Mining output too has contracted in 18 months out of 20 months in the past.

Such decline in the every front of the core industries leaves one important question unanswered. Can we really reverse India’s industrial decline? Can we really re-write India’s growth story?

Well the answer is a clear NO if there is absence of support from Core Industries. It is important that the synergy relation be established between different industries. This helps in sustainable development and growth. It is important that the nation pushes for the growth of infrastructure. There is a need for push in infrastructure and industrial investments. Only if we achieve this investment we can see a positive turnaround.

Investment in Core Industries

Core industries act as the fuel for the industrial output and its difficult to keep the train of industrial output running without fuel of core industries. Thus core industries production is the part and parcel for the manufacturing industry.

Additionally there is a need to create a competitive business environment. This would require quickly solving the issues pertaining to the delay in project execution. There is a need to identify the problem at the grass root level as it will help in better understanding of the situation. Quick and single window mechanism for approval should be implemented in different states so as to attract foreign direct investment as well as spur investments from Indian companies.

The investment increase coupled with structured process will help in improving the job market. Jobs will be created which will lead to improved income which in turn will lead to improved household consumption. As far as the policy issues are concerned, the investment environment should be made healthy and favorable for the corporates by reducing the lending rates. Pre-election government spending will also help in temporary development.

Industrial Output Statistics

In February 2013, the industrial output grew by mere 0.6% as compared to a year ago. Manufacturing was a sector which showed a growth of 2.2% in output whereas other areas like mining and quarrying, and electricity contacted. Mining contracted nearly 8% with electricity contracting as high as 3.2% respectively. Reports indicate that both the sectors posted their worst performance in several years. Weak household demand due to unfavorable spending environment has resulted in declining of Consumer durables output. The output the eight core infra industries contracted by as high as 2.5%. This resulted in poor IIP numbers as these industries have over 38% weight in IIP. A decline in utilities like generation of electricity, production of crude oil, coal, natural gas, etc. has adversely impacted the overall IIP.

Thus we can see that the core industries have continued to perform badly which is now a sign of concern for the economy. Such kind of poor results and growth would hamper India’s rating in the International market, which was already reduced by S&P few months ago.


Lastly of all said and done, it is needless to say that the problem is well known to the policy makers by now. There is a need for the solution now. Solution for the problem is crystal clear and the only need of the hour now is implementation and faster execution. Least bureaucracy, improved transparent, good governance, favorable investment climate, etc. can only help the economy revive now. If this is not achieved now, the condition would worsen.


Niraj Satnalika

Niraj is an MBA in International Business (Finance). Prior to this he completed B.Tech in Electronics and Instrumentation. He is currently working with Confederation of Indian Industry (CII), Kolkata in capacity of Consultant. Satnalika is actively involved with an NGO and works towards promoting education among the underprivileged.

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