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Industrial growth has moderated to 5.6 per cent in May, with manufacturing activity in general exhibiting neither any buoyancy nor marked slowdown.
The Central Statistics Office has also revised downwards the growth rate for April, with the year-on-year increase in the Index of Industrial Production (IIP) now placed at 5.8 per cent, compared with the earlier 6.3 per cent estimate.
The cumulative IIP growth rate for the first two months of the current fiscal works out to 5.7 per cent.
Considering that April-May 2010 had returned a 10.7 per cent growth – with this at 8.5 per cent in May 2010 – the latest numbers are not too bad. They suggest only a moderation in growth rather than any pronounced slowdown.
At the same time, there is cause for concern arising from the not-so-good performance of capital goods, which is a proxy for investment taking place in the economy.
Capital goods production in May was only 5.9 per cent higher on annual basis (against 15.8 per cent in the same month of last year), with growth during April-May at 6.6 per cent (25.2 per cent).
A similar growth decline relative to the previous year has taken place for consumer durables: 5.2 per cent (14.7 per cent) for May and 4.5 per cent (19 per cent) for April-May.
Among the major constituents of the IIP, manufacturing clocked 5.6 per cent growth in May (against 8.9 per cent in the same month of last year), with the corresponding rates being 1.4 per cent (7.9 per cent) for mining and 10.3 per cent (6.1 per cent) for electricity.
During the April-May period, manufacturing grew by six per cent (compared with 11.6 per cent in the first two months of the previous fiscal), while these amounted to 1.3 per cent (8.5 per cent) for mining and 8.4 per cent (6.3 per cent) for electricity.
Within manufacturing, apart from consumer durables and capital goods, other sub-sectors also registered lacklustre growth.
Production of basic goods rose year-on-year by 7.2 per cent in May (against 6.1 per cent in May 2010) and seven per cent (6.4 per cent) in April-May, with the corresponding rates at 0.9 per cent (11.7 per cent) and 2.6 per cent (11.8 per cent) for intermediate goods, and 5.6 per cent (1.9 per cent) and 5.3 per cent (4.3 per cent) for consumer non-durables.
Slipping into negative
Among individual industries, the ones that have recorded really poor (in fact, negative) growth include textiles (minus 6.6 per cent in May and minus five per cent in April-May), electrical machinery and apparatus (minus 6.1 per cent and minus 1.6 per cent), other machinery and equipment (minus 5.1 per cent and minus 2.8 per cent), and rubber and plastic products (minus 3.8 per cent and minus 3.6 per cent).
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