The Hindu : Business : Industrial growth shrinks

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Friday, Mar 13, 2009
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Industrial growth shrinks

Ashok Dasgupta

Manufacturing and mining sectors pull down growth

NEW DELHI: For the second month in a row and the third time in four months, the growth rate in industrial production slipped by 0.5 per cent in January mainly owing to shrinking output by manufacturing and mining sectors as compared to a relatively robust 6.2 per cent growth achieved in January last year.

According to the IIP data released here on Thursday by the Central Statistical Organisation (CSO), the manufacturing sector, having a weight of nearly 80 per cent in the index, clocked a fall of 0.8 per cent in January, while mining output also shrank by 0.4 per cent. Electricity generation, however, reported a much lower growth rate of 1.8 per cent as compared to 3.7 per cent in January 2008.

The lower industrial growth for two consecutive months — for the first time in a span of 16 years — appears to be a clear reflection of the fact that the spurring effects of the stimulus packages are yet to percolate down to the two major sectors of the Index of Industrial Production (IIP). “All three stimulus packages have not picked in. The industrial production figures would not reflect their impact,” Chief Statistician Pronab Sen said.

In the event, with industrial growth declining during October, December and January, the partial recovery witnessed in November 2008 is being dubbed as an aberration.

For the first ten months (April-January) of the current fiscal, industrial growth works out to three per cent as compared to a growth of 4.8 per cent for the whole of 2008-09, as per the official advance estimates. In such a scenario, achieving a GDP (gross domestic product) growth of 7.1 per cent during the fiscal year is under question.

Another silver lining, as per the revised data for December, is that the fall in industrial production was by a mere 0.63 per cent and not a steep two per cent as was initially estimated. In effect, the revised numbers for January too could be better than projected now. “Given the last three-four months’ trends, it [January data] could result in upward [movements] after revised estimates come [in],” Mr Sen said.

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