The Hindu Business Line : Higher mineral production drives IIP growth in April

High level of mineral production pulled up the Index of Industrial Production (IIP) to seven per cent in April 2008 against a low 3.9 per cent in the preceding month. However, it is still substantially lower compared with 11.3 per cent in April 2007.

Mining output increased by 8.6 per cent during the month against 2.6 per cent in April 2007. But growth rate in the manufacturing sector was lower at 7.5 per cent compared with 12.4 per cent in the same month last year. Similarly, electricity generation increased by 1.4 per cent against 8.7 per cent a year ago.

Consumer goods sector posted a growth of 8.9 per cent against 14.7 per cent in April last year.

Consumer non-durables growth rate went down to 9.8 per cent in April from 18.7 per cent in the same month last year, while consumer durable production grew by 5.5 per cent against 2.4 per cent.

Growth in intermediate goods production declined to 4.2 per cent from 10.6 per cent a year ago while capital goods output improved by 14.2 per cent compared with 10.9 per cent.

Basic goods production decelerated to 4.6 per cent from 8.6 per cent a year ago.

Reacting to the latest IIP figures, the Federation of Indian Chamber of Commerce and Industry (FICCI) said that it is too early to exactly know whether industrial sector growth has changed direction.

In the last one year, industrial growth has lost momentum largely due to factors such as an appreciating rupee, high interest rates and rising cost of inputs, it said.

The Associated Chambers of Commerce and Industry (Assocham) President, Mr Sajjan Jindal, said that higher input and borrowing costs coupled with global slowdown caused slippages in the IIP.

“It seems that slowdown has grappled India Inc. temporarily because of higher input costs, little availability of power, disruption in infrastructure facilities and under capacities of ports and the Government should address these issues with top priorities.”

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