The Reserve Bank of India (RBI) should devise a mechanism of differential rate of credit for manufacturing sector to revive growth, Commerce and Industry Minister Anand Sharma said Friday, expressing "deep concern" over contraction in factory output.
Industrial output, measured in terms of the Index of Industrial Production (IIP) shrank by 3.5 percent in March due to poor show of manufacturing and mining sectors, dampening hope for any early revival of economic growth.
Reacting on the data, Sharma said the slowdown, especially in manufacturing and capital goods segment, was a matter of "deep concern."
The minister urged the RBI for a differential rate of credit for manufacturing, saying there was a huge social dimension attached to the manufacturing sector as it supports millions of jobs.
Differential rate implies that the manufacturing sector should be provided credit at the interest rates lower than the market.
According to data released by the Central Statistics Office, manufacturing sector contracted by 4.4 percent March, while mining sector shrank by 1.3 percent.
Capital goods segment, an important indicator of the future industrial activities, contracted by an alarming 21.3 percent.
Sharma, who is on an official visit to Germany, also pressed for availability of credit at affordable rates for domestic industry and dollar credit for Indian exporters.
"Slow-down in exports growth in April in the backdrop of the economic crisis in the euro zone is also a worrisome development," Sharma said in a statement released here.
"I will be taking a stock-taking exercise with all export promotion councils on 17th May, 2012, and a meeting of the Board of Trade will be convened on 1st June, 2012," he said.
After the stock taking exercise is complete, the government will intervene in sectors which require support, he added.
The foreign trade policy for this year will be announced in the first week of June.
Sharma said he would also soon hold meeting with the government-industry task force and convey the details of the industry sentiments to Prime Minister Manmohan Singh and Finance Minister Pranab Mukherjee.