The Hindu : Front Page : Industrial growth slumps

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Tuesday, May 13, 2008
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Industrial growth slumps

Special Correspondent

Dismal performance by manufacturing sector

8.1% growth reported for the entire 2007-08
Consumer durables segment witnesses negative growth

NEW DELHI: Adding to the worries of the Government, which is battling in tandem with the Reserve Bank of India to rein in inflation, the industrial growth slumped to a six-year low of three per cent in March, mainly owing to a dismal performance by the manufacturing sector.

The industrial growth data as per the Index of Industrial Production (IIP), which was released here on Monday by the Central Statistical Organisation (CSO), show that the output increase witnessed in March this year was the lowest since the 2.4 per cent growth posted in February 2002.

With the growth rate in production plummeting in March — the terminal month of 2007-08 — the industrial growth for the entire fiscal also dipped to 8.1 per cent from 11.6 per cent notched up a year ago.

However, owing to the comparatively healthier performances during the other 11 months, the overall growth for the full year remained pegged at over eight per cent.

Deriving some solace on this account, Planning Commission Deputy Chairman Montek Singh Ahluwalia said: “There was an estimate of 8-8.5 per cent.

“The lower end of the range is acceptable.”

Consumer durables

Possibly owing to the slew of measures taken to tame inflation, the manufacturing sector, which carries a weightage of nearly 80 per cent in the IIP, grew by a mere 2.9 per cent in March as compared to 16 per cent in March 2007.

The segment mainly responsible for the dismal show was the consumer durables segment which witnessed a negative growth.

During March, while the growth in mining slumped to 3.8 per cent from eight per cent in the same month a year ago, electricity generation also slipped to 3.7 per cent as compared to 7.9 per cent.

As per use-based classification, the data revealed that the consumer durables sector showed a negative growth of 2.1 per cent in March against 3.8 per cent in March 2007, while the consumer non-durables segment posted a marginal growth of 0.6 per cent as compared to 20.2 per cent.

Alongside, a deceleration in growth was also witnessed in other segments such as capital goods (8.6 per cent against 18.1 per cent), basic goods (3.1 per cent against 11.9 per cent) and intermediate goods (3.5 per cent against 15.3 per cent).

Mining sector

For the entire fiscal, however, the mining sector growth dipped marginally to five per cent from 5.4 per cent while the growth rates of manufacturing and electricity sectors decelerated to 8.6 per cent and 6.4 per cent from 12.5 per cent and 7.2 per cent, respectively in 2006-07.

According to analysts, the industrial slowdown, as witnessed in March 2008, could have a marginal effect on the country’s overall economic growth as also impact demand during the early part of the current fiscal on account of the inflationary pressure.

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