Industrial growth drops to 1.6 pc in Dec; lowest in 20 months

New Delhi, Feb 11 (PTI) Industrial expansion plunged to a20-month low of 1.6 per cent in December,causing a blip inIndia''s growth track, but policy makers remained unfazed onthe prospects of robust GDP numbers for the current fiscal.

Though the December factory output growth has somewhat"disappointed" Finance Minister Pranab Mukherjee, experts arenot surprised in the backdrop of a very high expansion a yearago.

The Index of Industrial Production (IIP) had grown by 18per cent during the same period last year, making it adaunting challenge to maintain the expansion momentum thisfiscal due to the high base.

Industrial growth during April-December this fiscal stoodat 8.6 per cent, unchanged in comparison to the correspondingperiod of the previous year, official data released here todayshowed.

The "disappointing" numbers came just days after theGovernment''s prediction of "encouraging" 8.6 per cent economicgrowth this fiscal, against 8 per cent in 2009-10.

Meanwhile, the IIP for November has been revised upwardsto 3.6 per cent from the earlier estimate of 2.7 per cent.

The manufacturing segment, which has a weight of about 80per cent on the IIP, managed to grow barely by one per cent inDecember from a huge 19.6 per cent a year ago.

The capital goods sector, reflecting investment,contracted to (-)13.7 per cent in December, 2010 versusimpressive 42.9 per cent expansion a year ago.

"Monthly and weekly numbers do not reflect correctpicture. Therefore you shall have to take the whole year intoaccount. Let us see how it reflects in the annual picture,"Finance Minister Pranab Mukherjee said though, he termed theDecember numbers as "very unfortunate and disappointing".

Similar views were expressed by Planning CommissionDeputy Chairman Montek Singh Ahluwalia who said month-on-monthfluctuations in IIP should not be a cause of concern as theeconomy, as a whole, was on a healthy growth track.

"In order to achieve 8.5 GDP growth, 8 per centindustrial growth for the whole year (2010-11) is enough,"Ahluwalia said.

Rajrishi Singhal, Head (Policy