The Hindu Business Line : Manufacturing slowdown clips industrial growth to 5% in Dec `05

A SHARP dip in manufacturing growth, coupled with slowdown in the mining and electricity sectors, pulled down industrial growth to 5 per cent in December 2005, compared to a strong 8.9 per cent growth recorded during the corresponding year-ago period.

The Index of Industrial Production (IIP) was down with the manufacturing sector clocking a 5.9 per cent growth during the month, against 9.8 per cent in December 2004. Growth in the mining sector fell to a negative 1.8 per cent ( 4.8 per cent), while the electricity sector logged a much lower 2.9 per cent growth ( 4.5 per cent), according to data released by the Government on Friday.

During the first nine months of this fiscal, the Index rose by a lower 7.8 per cent compared to 8.67 per cent during April-December 2004-05.

During April-December 2005-06, manufacturing witnessed a slight fall to 8.9 per cent compared to 9.2 per cent growth logged during the corresponding period of 2004-05.

The mining sector posted only 0.4 per cent growth so far this fiscal compared to 5.1 per cent in the corresponding period last fiscal, while electricity also recorded lower growth at 4.8 per cent (6.4 per cent).

As per use-based classification, growth in basic goods stood at 5 per cent in December 2005 over the corresponding period of 2004, while capital goods witnessed 14.6 per cent growth and intermediate goods recorded a negative 0.4 per cent growth.

The consumer durables and consumer non-durables sectors recorded a growth of 12.3 per cent and 4.8 per cent, respectively, with the overall year-on-year growth in consumer goods at 6.5 per cent in December 2005.

For the first nine months this fiscal, basic goods grew at 6 per cent, the same as in April-December 2004.

Capital goods recorded a higher growth at 15.7 per cent against 13.8 per cent during the period, while intermediate goods witnessed less growth at 2.2 per cent (6.9 per cent).

The consumer goods sector grew at 12.2 per cent (11.4 per cent), with consumer durables witnessing 13.6 per cent growth and consumer non-durables registering 11.7 per cent growth during the period.

As many as 12 of the 17 industry groups reported positive growth in December this fiscal over the corresponding period of the last financial year.

The `Other manufacturing industries' recorded the highest growth of 28.7 per cent, followed by 16.2 per cent in `non-metallic mineral products' and 12.1 per cent in `transport equipment' during December 2005 over December 2004.

The paper, paper products and printing group registered a negative growth of 25.8 per cent, followed by a decline of 16.5 per cent in `leather and leather and fur products, and 5.7 per cent in wood and wood product; furniture and fixtures during the month under review.

According to a leading industry chamber, the slowdown in the manufacturing sector in December 2005 could be due to three reasons — a slow down in investment in greenfield projects, poor performance of the infrastructure sector in the recent past and the withholding of purchases in the economy in anticipation of a favourable Budget.