The Hindu Business Line : Kerala industrial units’ plea against power tariff hike

Kochi, Nov. 22 Several industrial units in Kerala have urged the State Government to reconsider the proposal for power tariff hike as the manufacturing industry here is already reeling under severe strain caused by the burgeoning energy costs. Any increase in power tariff will lead to a collapse in several sectors, they said.

According to them, the recent CII-ASCON survey has raised an alarm in the manufacturing sector in India. It brings out the fact that more than 50 per cent of the manufacturing group of activities have recorded either moderate or negative growth rate during April-September this fiscal.

Major factors contributing to the lower growth rate are identified as prevailing high interest rates, low credit availability, strengthening of rupee against the dollar to the extent of 14 per cent and the adverse impacts of various regional free trade agreements signed in the past two years.

Growth rate

A major boost to the Indian economy was the manufacturing growth rate which showed signs of a steady growth since 2003. In the past three years the demand has gone up and commodity prices also were stable.

The survey shows a downtrend in the manufacturing sector, which was promoting the national economy along with the service sector to register and over all 9 per cent growth rate, even when agriculture was performing badly.

The decline in the manufacturing sector therefore is likely to pull down the over all GDP growth considerably, particularly on account of the fact that distress in the agriculture sector continues to prevail.

The survey points out that it is the consumer goods sector that is worst affected and the significant contributor to the slow down.

The impact is going to be severe in the power intensive chemical processing industry, which also includes the heavy chemical Chlor-alkali sector, Dr M.P. Sukumaran Nair, Managing Director of State-owned Travancore Cochin Chemicals Ltd at nearby Eloor.

‘A death blow’

It is in this context that the proposal of the Power Department of the State Government to enhance the power tariff becomes a death blow to the manufacturing sector in the State, he said. Already the cost of grid power to the HT/EHT consumers in the State is higher than several other neighbouring States. Any increase in the power tariff is likely to put a severe strain in vital manufacturing units in the State such as caustic soda, mineral processing, fertiliser manufacturing, cement, steel and aluminium.

The CII survey also concurs with the CMIE estimate that the Indian economy to grow 8.8 per cent during the quarter end at 2007 against an earlier prediction of 9.3 per cent in July this year, he said.

This again points to the fact that the situation is not conducive for any increase in power tariff in the State, especially at a time, when cost of industrial petroleum fuels are increasing day by day.