NEW DELHI: India’s growth story remains robust, if you go by industrial production. The Index of Industrial Production (IIP) rose 8.6% in February 2008, with capital goods growth rebounding to double-digit levels after falling to an inexplicable low of 2.1% in January, and consumer durables climbing out of negative territory.
This comes as good news, as the IIP growth rate had dipped to 5.8% in January from 7.7% in December. Industrial growth at 8.6% in February 2008 is still lower than the 11% achieved in February 2007.
The data is sure to give policymakers more room for manoeuvre, as they try to balance growth and inflation and come under pressure to tighten monetary policy to control inflation.
Ministry of statistics and programme implementation secretary Pranab Sen said, “The February number reaffirms the belief that India’s growth story is very much on track. Although growth is a tad lower compared with previous months due to high base effect, cumulative growth for the April-December period indicates that investment-led growth is very much intact.”
The growth figures in some of the vital sectors like capital goods have brought cheer and confidence in the economy.
Prime Minister’s economic advisory council member Saumitra Chaudhuri said, “Capital goods growth, which, by falling to 2.1% in January, 2007-08, had policymakers worried, is back in double digit at 10.4% in February 2007-08. However, it is lower than 18% witnessed in February 2006-07.”
The story in consumer durable sector, which includes automobile and whitegoods, has also bettered. From a negative 3.1% in January, the growth in consumer durables sector bounced back with 3.3% growth in February 2007-08, and is near double of 1.8% in February 2006-07.
The sector has shown negative growth in seven months and positive growth in just four months, with February being the fourth month in 2007-08 fiscal. While the cumulative growth in consumer durables since April still continues to be in the negative at 1.0% compared to 9.7% in February 2006-07, the industry, it seems, is shedding its blues on some pick-up in the demand.
Mr Sen said, “The consumer durables sector is bearing the brunt of higher interest, as demand is interest-sensitive. And one can expect a bounceback only if interest rates come down from the prevailing levels. Besides, implementation of the 6th Pay Commission recommendation could also provide some impetus.”
The consumer non-durable sector, comprising largely FMCG products, grew by a whopping 11% in February 2007-08 compared with 9.3% in the same month in 2006-07. The sector’s performance is expected to better with customs duty cuts in edible oils and excise duty cuts in the budget start playing on the demand.
Basic goods and intermediate goods grew by 7.3% (10.7%) and 8.2% (13.3%), respectively, in the month under consideration. Manufacturing, which occupies the highest weightage of about 80% in the Index of Industrial Production, grew at 8.6% against 12% in February, 2007, much higher than 5.9% in January.
As many as 15 out of the 17 industry groups showed positive growth in February 2007-08. Wood and wood products, including furniture and fixture, showed negative growth of 13.8% besides textile products, including wearing apparel which showed a negative growth of 1.7%.
For the first 11 months of last fiscal, industrial growth stood at 8.7% against 11.2% in 2006-07, according to data released by the government. Mining and electricity also did their bit for this turnaround.
In February, electricity generation grew by 9.8% from a low of 3.3% a year-ago while mining output managed to maintain the growth rate of 7.5% in February 2007-08. Mining and electricity had dropped to 1.8% and 3.3% in January 2007-08.
This comes as good news, as the IIP growth rate had dipped to 5.8% in January from 7.7% in December. Industrial growth at 8.6% in February 2008 is still lower than the 11% achieved in February 2007.
The data is sure to give policymakers more room for manoeuvre, as they try to balance growth and inflation and come under pressure to tighten monetary policy to control inflation.
Ministry of statistics and programme implementation secretary Pranab Sen said, “The February number reaffirms the belief that India’s growth story is very much on track. Although growth is a tad lower compared with previous months due to high base effect, cumulative growth for the April-December period indicates that investment-led growth is very much intact.”
The growth figures in some of the vital sectors like capital goods have brought cheer and confidence in the economy.
Prime Minister’s economic advisory council member Saumitra Chaudhuri said, “Capital goods growth, which, by falling to 2.1% in January, 2007-08, had policymakers worried, is back in double digit at 10.4% in February 2007-08. However, it is lower than 18% witnessed in February 2006-07.”
The story in consumer durable sector, which includes automobile and whitegoods, has also bettered. From a negative 3.1% in January, the growth in consumer durables sector bounced back with 3.3% growth in February 2007-08, and is near double of 1.8% in February 2006-07.
The sector has shown negative growth in seven months and positive growth in just four months, with February being the fourth month in 2007-08 fiscal. While the cumulative growth in consumer durables since April still continues to be in the negative at 1.0% compared to 9.7% in February 2006-07, the industry, it seems, is shedding its blues on some pick-up in the demand.
Mr Sen said, “The consumer durables sector is bearing the brunt of higher interest, as demand is interest-sensitive. And one can expect a bounceback only if interest rates come down from the prevailing levels. Besides, implementation of the 6th Pay Commission recommendation could also provide some impetus.”
The consumer non-durable sector, comprising largely FMCG products, grew by a whopping 11% in February 2007-08 compared with 9.3% in the same month in 2006-07. The sector’s performance is expected to better with customs duty cuts in edible oils and excise duty cuts in the budget start playing on the demand.
Basic goods and intermediate goods grew by 7.3% (10.7%) and 8.2% (13.3%), respectively, in the month under consideration. Manufacturing, which occupies the highest weightage of about 80% in the Index of Industrial Production, grew at 8.6% against 12% in February, 2007, much higher than 5.9% in January.
As many as 15 out of the 17 industry groups showed positive growth in February 2007-08. Wood and wood products, including furniture and fixture, showed negative growth of 13.8% besides textile products, including wearing apparel which showed a negative growth of 1.7%.
For the first 11 months of last fiscal, industrial growth stood at 8.7% against 11.2% in 2006-07, according to data released by the government. Mining and electricity also did their bit for this turnaround.
In February, electricity generation grew by 9.8% from a low of 3.3% a year-ago while mining output managed to maintain the growth rate of 7.5% in February 2007-08. Mining and electricity had dropped to 1.8% and 3.3% in January 2007-08.
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