New Delhi, Oct 10 (UNI) Raising fears of an industrial recession, the Index for Industrial Production (IIP) showed a paltry growth of 1.3 per cent in August 2008 as compared to the robust figure of 10.9 per cent in the same month last year.
Even more dissapointing was the fact that Manufacturing slumped to a low growth rate of 1.1 per cent in August 2008 as compared to a growth rate of 10.7 per cent in 2007-08. Manufacturing has a weight of nearly 80 per cent in the IIP.
Mining was up by four per cent in August 2008 when compared to 14.7 per cent in August last year.
And, Electricity-the third component of the Index-displayed a growth rate of 0.8 per cent in August 2008 as compared to 9.2 per ecent in August 2007.
It is thus clear that the industrial economy is performing significantly worse on all parameters of Industrial Production.
Output growth has fallen from the double digit levels early last year.
A number of factors have contributed to the dismal performance, economists say.
The knee-jerk reaction of the RBI in pursuing a hawkish policy on the monetary front, steeply raising interst rates and now a complete U-turn of pumping liquidity by as much as 60,000 crore in the last few days to address the liquidity crunch as well as to tackle the deepening global crisis and domestic demands constraints, a hefty rise in the value of the rupee and now its signficant deprictiation to the six-year low figure of Rs 49.30, the extreme volatility of the stock markets and now its secular decline for the last few months as well as the high inflation rate have resulted in a situation where conditions are akin to an industrial recession.
The Indian authorities and several independent economist are pitching or a lower growth forecast.The IMF recently projected that the economy will clock a growth rate of 7.9 per cent, while Finance Minster P Chidambaram stuck to his forecast of eight per cent for the fiscal.
Planning Comission Deputy Chairman Montek Singh Ahluwalia now maintains the growth rate at 7.5 per cent would be respectable in a year when the global system is at its worst in the past several decades.
The squeeze in credit lines saw consumer durable growth slummping to 5.1 per cent in August 2008 as against 6.2 per cent in August 2007.
The Capital goods number for August stands at 2.3 per cent against 30.8 per cent YoY.
The July industrial growth has been provisionally revised to 7.4 per cent from 7.1 per cent.
The cumulative growth for industrial production for the period April-August 2008-09 stands at 4.9 per cent as compared to the corressponding period of the previous year.
The cumulative growth for mining, manufacturing and electricity sectors for the month of Apr-Aug 2008-09 over the corresponding period 2007-08 is 4.1 per cent, 5.2 per cent and 2.3 per cent respectively.
The industry group 'Transport Equipment and Parts' have shown the highest growth of 11.2 per cent in August 2008, followed by 8.9 per cent in 'Food Products' and 8 per cent in 'Basic Metal and Alloy Industries'.
On the other hand, the industry group 'Wool, Silk and Manmade fibres' textiles have shown a negative growth of 14.9 per cent followed by 12.3 per cent in 'metal products and parts, except 'Machinery and Equipment' and 8.4 per cent in 'Rubber, Plastic , Petroleum and Coal products'.
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