Industrial growth dips to 3.6% in February

Industrial growth continues to be sluggish, with official data pointing to a 3.6 per cent year-on-year production increase in February.

That marks a fourth successive month of lacklustre growth in the official index of industrial production (IIP), which is partly due to the so-called base effect: February 2010 recorded a year-on-year rise of 15.1 per cent.

For the April-February period as a whole, the IIP growth amounted to 7.8 per cent, as against 10 per cent in corresponding 11 months of 2009-10.

High base

The impact of a high base is likely to show up in March as well, which raises a question mark over the Centre's projection of a real gross domestic product (GDP) growth of 8.6 per cent for 2010-11. That figure, according to the Advance Estimates released on February 7, assumed an industrial growth of 8.2 per cent, which now seems unlikely.

However, the Deputy Chairman of the Planning Commission, Mr Montek Singh Ahluwalia, felt that the GDP growth estimate would not have to be revised downwards “because I think agricultural growth will be higher than the earlier forecast (of 5.4 per cent)”.

In fact, the Agriculture Ministry had, only last week, upped its previous production estimates of foodgrains, oilseeds and sugarcane.

All the three major sectors constituting the IIP registered lower growth in February compared with their 2010 same-month levels: Manufacturing (3.5 per cent versus 16.1 per cent), mining (0.6 per cent versus 11 per cent) and electricity (6.7 per cent versus 7.3 per cent).

Within manufacturing, the segment to have taken the biggest hit was capital goods, the production of which slumped by 18.4 per cent in February (against 46.7 per cent in the same month of last year).

Consumer durables

On the other hand, consumer durables did well, growing by 23.4 per cent on top of 29.1 per cent in February 2010. Production of basic goods went up by 5.9 per cent (down from 8.5 per cent in February), with these at 8.4 per cent (15.9 per cent) for intermediate goods and 6.1 per cent (minus 0.8 per cent) for consumer non-durables.

For the April-February period, the cumulative growth in the index for manufacturing amounted to 8.1 per cent (compared with 10.4 per cent in the corresponding 11 months of the preceding fiscal), with these at 6.5 per cent (9.6 per cent) for mining and 5.4 per cent (5.8 per cent) for electricity.

During April-February, capital goods production grew by 8.7 per cent (against a corresponding 19 per cent for 2009-10), with these being 6.5 per cent (6.8 per cent) for basic goods, 9.1 per cent (13.6 per cent) for intermediate goods, 21.8 per cent (23.8 per cent) for consumer durables and 1.9 per cent (0.3 per cent) for consumer non-durables.

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