High rates, rupee hurt India manufacturing - minister

A strong rupee and high interest rates are responsible for a slowdown in India's manufacturing growth, which the government hopes to reverse with new industry initiatives, the minister of state for industries said.
Industrial output grew at its weakest annual pace in six years in March, data showed on Monday, knocking the rupee to a one-year low and fanning speculation the Reserve Bank of India (RBI) may hold off tightening policy further in its fight against soaring inflation.
"The hardening of the rupee has adversely impacted our exports, which account for a major chunk of manufacturing," Ashwani Kumar told Reuters in an interview.
"The high interest rate burden which has hit the consumer durables industry is responsible for a decline in manufacturing."
He said a new thrust by the government to boost investment and technology in leather, textiles, food processing and electronic hardware would help reverse the slowing trend in manufacturing.
"As soon as interest rates soften and there is a general pick-up in the economy, we will be able to reverse the trend."
He expected the economy to maintain a robust rate of growth despite sluggishness in other parts of the world.
"Despite a general slowdown that one is witnessing in the global economy, particularly in the lead economy of the United States, India will be able to maintain an annual GDP growth rate of 8 percent-plus," Kumar said.
"I have full reason to believe that the India growth story is a continuing one."
He expected wholesale price inflation, which hit a 3-½ year high of 7.6 percent in late April, to moderate sooner than expected.
"It will take about 8 to 12 weeks for the impact of the preliminary measures of the government to be felt on prices," Kumar said.
An "unprecedented and extraordinary" rise in global food and energy prices would have an adverse impact, but the government was looking to insulate the economy from such shocks.
"We are not allowing a hike in global prices so far to hit the common man, and the oil companies and the government are absorbing the loss," Kumar said.
"But this is a serious situation and we are concerned."