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Industrial growth slips to single digit; 7.1% in June

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We did expect deceleration, says Montek.

Our Bureau

New Delhi, Aug. 12

The country's industrial growth has slowed down to 7.1 per cent in June. This follows eight consecutive months of double-digit year-on-year increases in the official index of industrial production (IIP).

A large part of the deceleration has been on account of the so-called base effect: The double-digit growth rates for the preceding months were all on lower bases. As against this, the 7.1 per cent growth for June came on top of a corresponding 8.3 per cent figure for the same month last year – making it not all that bad a number.

“The industrial growth in June is a little bit lower…we did expect deceleration,” the Planning Commission Deputy Chairman, Mr Montek Singh Ahluwalia, told mediapersons here on Thursday. However, he was hopeful of the current fiscal as a whole returning a “very high single-digit” growth in factory output, compared to the average 10.5 per cent for 2009-10.

All the three major constituents of the IIP recorded lower year-on-year increases for June relative to that for the same month of 2009 – manufacturing (7.3 per cent versus 8 per cent), mining (9.5 versus 14.2) and electricity (3.5 versus 8).

At the same time, some of the leading components within manufacturing continued to exhibit buoyancy. The growth rates for capital goods and consumer durables – which are reflective of investment activity and spending confidence among households – stood at 9.7 per cent and 27.4 per cent in June, compared with the June 2009 levels of 13.4 per cent and 16.2 per cent, respectively.

Among other manufacturing sub-sectors, production of intermediate goods registered an annual growth of 8.7 per cent in June (against 7.9 per cent in the same month of 2009), while amounting to 3.4 per cent (10.7 per cent) for basic goods and 1.3 per cent (0.7 per cent) for consumer non-durables.

For the entire first quarter of this fiscal, overall industrial growth averaged 11.6 per cent (compared to 3.9 per cent for April-June 2009), with these correspondingly working out to 12.2 per cent (3.4 per cent) in the case of manufacturing, 10.4 per cent (6.8 per cent) for mining and 5.6 per cent (5.9 per cent) for electricity.

The cumulative year-on-year production growth for capital goods during April-June 2010 was 34 per cent (against a mere two per cent in the first quarter of last fiscal), while these were correspondingly at 27.9 per cent (15.6 per cent) for consumer durables, 2.4 per cent (minus 5.3 per cent) for consumer non-durables), 9.8 per cent (7.4 per cent) for intermediate goods and 6.9 per cent (6.2 per cent) for basic goods.

Related Stories:
At 11.5%, May industrial growth hits 7-month low
Capital goods power 17.6% industrial growth in April
Industrial growth hits 25-month high in Nov
Industrial growth in FY10-11 to be shade better than last fiscal: Rangarajan

(This article was published in the Business Line print edition dated August 13, 2010)
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