The country witnessed negative industrial growth after a gap of 15 years. The situation indicates the impact of global slowdown on the Indian economy. Almost all industrial sectors are facing the heat despite various measures taken by the government to mitigate the impact of the global crisis. The reserve bank can take more monetary steps by cutting key interest rates to stop further worsening of the situation.

There is a sharp slump in demand in the foreign markets, causing 1.2% year-on-year contraction in the manufacturing activity. Manufacturing sector contributes about 80 per cent in the index of industrial production (IIP). Goldman Sachs forecasted further decline in the export activities leading to negative growth in the next month also. The chairman of the Prime Minister's Economic Advisory Council, Suresh Tendulkar said, "The situation is much graver than expected."

The recent decline in IIP has paved a way to further revise the GDP projections which stands at around 7% for the year to end-March 2009. Indian economy was growing at 9 per cent in the previous three years and economists were expecting double digit growth for the current financial year. However, global slowdown has changed the entire scenario.

The chief statistician of the country, Pronab Sen said that the recently announced economic booster package would help to push the economic growth rate. The excise duty cut on various products would also help to boost demand.

Meanwhile, Prime Minister Dr. Manmohan Singh discussed the situation with the Investment Commission, headed by Tata group chairman, Ratan Tata and demanded the view of the industry experts in the wake of sharp reduction in IIP.