New Delhi, Jan 12: Growth in the index of industrial
production and that of the infrastructure sectors were neck
and neck in November, the first showing a rise of 2.4 per cent
after having turned negative for the first time in 15 years in
October, and the second 2.2 per cent.
However, in respect of November 2007, both ended
lower. IIP growth lagged behind the 4.9 per cent in the
year-ago period, and the infrastructure index was a healthier
5.1 per cent in November last year. Core sector growth in
October 2008 was 3.1 per cent.
The six core sectors have more than a 25 per cent weight
in the IIP.
During April-November 2008-09, the core industries
registered a growth rate of 3.6 per cent as against 6.4 per
cent in the corresponding period previous year.
Industrial production was encouraging in the context of
the dismal performance of exports and the auto sector in
November.
Manufacturing, having a weight of around 80 per cent in
the Index of Industrial Production (IIP), grew by 2.4 per cent
in November against 4.7 per cent a year ago.
Industrial production figures were revised up to
(-)0.3 per cent for October from (-)0.4 per cent estimated
earlier.
Commenting on the industrial growth numbers, the Prime
Minister's Economic Advisory Council Chairman, Suresh
Tendulkar, said, "The numbers are above my expectations and in
the coming days, I expect (them) to improve more."
Tendulkar said a bulk of the rural market has not been
affected by the global crisis and it was only the urban
population that was not spending.
For the first eight months of this fiscal, industrial
production grew by 3.9 per cent against 9.2 per cent in the
year-ago period.
The November data did not factor in the stimulus packages
of December and January, and industrial production is expected
to show improvement from December onwards.
"After the easing of monetary and fiscal policy, I
expect urban consumers to spend more and industrial activities
to improve," Tendulkar said.
However, the base effect came into play in pushing up
industrial production. The base effect reflects industrial
numbers in the previous fiscal's corresponding period.
Industrial production rose 5.3 per cent in November
2007, the lowest in 13 months till then.
Growth in India's six core infrastructure industries
slowed to 2.2 per cent in November 2008 as petroleum refinery
products, electricity production and finished steel showed
poor performance.
Displaying poor performance, petroleum refinery products
production recorded a decline of 1.1 per cent in November 2008
against a growth rate 5.2 per cent a year ago.
While finished carbon steel registered a decline of 1.4
per cent compared to a growth rate of 4.8 per cent in the same
period last year.
However, coal output grew by 9.6 per cent in November
2008 from 7.7 per cent, while cement production rose by 8.7
per cent from 5.2 per cent.
Crude oil production rose by merely 0.5 per cent in the
period against 0.3 per cent in November 2007.
Yes Bank Chief Economist Shubhada Rao said, "It is a
positive surprise, much better than our expectations due to
(the) base effect. From here onwards, we would see gradual
improvement in the IIP figures as the worst is over. I expect
industrial production growth to be at 3.5 per cent for the
current fiscal."
However, consumer durables and capital goods
production continued to fall in November. While capital goods
output shrank by 2.3 per cent, consumer durables production
fell by 4.2 per cent. Some economists say industrial
production numbers are still low.
Economic Research Institute RIS Director-General
Nagesh Kumar said, "(The numbers are) low due to the tight
monetary policy in the first half of the year followed by
global recession in the second half. With the money supply
being eased by the government, I expect (them) to improve in
the coming months."
As many as ten out of 17 industry groups have shown
growth during November as compared to the corresponding month
of the previous year.
The production of cotton textiles, man-made fibre
textiles, leather and fur products, basic chemicals, metal
products, transport equipment and other manufacturing
industries contracted in November.
Bureau Report