Industrial Growth Jumps 8.6% In Feb

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.

Chhattisgarh To Build Four Industrial Areas

Chhattisgarh will invest Rs five billion to set up four industrial areas on a total of 6,814 hectares. This will be done to meet increasing demand of land for industry in the mineral-rich state, official sources said. The industrial areas will come up in Raipur, Bilaspur, Raigarh and Rajnandgaon districts and will mainly house sponge iron and mini steel plants, ferro alloys units, power plants and captive power plants. Officials in Chhattisgarh State Industrial Development Corp (CSIDC) say the government has already identified a 2,074-hectare stretch at Jora Tarai locality in Rajnandgaon district, a 791-hectare piece at Dagori in Bilaspur, 2,483 hectare at Tilda in Raipur and 1,466 hectares at Lara in Raigarh.

The total project cost for setting up four industrial areas will be about Rs 500 crore, the official said, adding government has begun moves for drafting a rehabilitation package for the people residing in the proposed areas in four districts. The government has already made an initial approval of Rs 1.5 billion for Rajnandgaon, Rs 910 million for Raigarh, Rs 1.17 billion for Raipur and Rs 590 million for Bilaspur. CSIDC has already built industrial estates at Siltara and Urla areas in Raipur, Sirgitti in Bilaspur and Borai in Durg.

Industrial Output Witnesses 7.6 Pc Growth In Dec

New Delhi: The official Index of Industrial Production (IIP) has witnessed a 7.6 per cent year-on-year growth during December, marking a second successive month of sub-par growth following the 5.1 per cent of November. However, there is an element of statistical illusion in the 7.6 per cent figure in the latest recorded month. For, it comes on a high base growth rate of 13.4 per cent during December 2006, just as the 5.1 per cent IIP increase for November 2007 was over and above the 15.8 per cent in November 2006.

Moreover, among the IIP''s main sectoral components, the manufacturing index has risen by a reasonably healthy 8.4 per cent year-on-year in December (though below the 14.5 per cent for the same month of the previous year). For the first nine months of the current fiscal, industry as a whole has grown by nine per cent (compared to 11.2 per cent in April-December 2006), with these standing at 9.6 per cent (12.2 per cent) for manufacturing, 4.9 per cent (4.4 per cent) for mining and 6.6 per cent (7.5 per cent) for electricity. The IIP data, moreover shows a 16.6 per cent rise in production of capital goods in December and 20.2 per cent during April-December 2007. This comes on the corresponding previous year''s growth rates of 26.2 per cent and 18.6 per cent.

The high growth in this sub-sector is indicative of buoyant investment activity. This, in turn, seems to be replacing the earlier consumption- and export-driven growth phase. Proof of this is in consumer durables, which has recorded growth rates of 2.2 per cent in December 2007 (1.8 per cent in December 2006) and 1.3 per cent in April-December 2007 (11.2 per cent in April-December 2006).

Industrial Growth Plunges To 5.3%

Growth in India''s industrial production plunged to 5.3 per cent in November this fiscal from 15.8 per cent last year following a huge decline in the manufacturing sector. The manufacturing growth dipped to 5.4 per cent in November from 17.2 per cent in 2006. Electricity segment also showed a dismal performance growing by only 5.8 per cent, against 8.7 per cent. Mining was down from 8.8 per cent to 3.5 per cent. For the April-November period of fiscal 2007-08, the Index of Industrial Production settled at a single digit figure of 9.2 per cent against 10.9 per cent in the same period last year.All the segment indices were in the single digit for the April-November period.