RTTNews - India's Index of Industrial Production, or IIP, turned positive, after reporting a negative growth consecutively for months, even as certain sectors like consumer non-durables and capital goods continue to show negative growth.
As per the data released by Central Statistical Organization of the Ministry of Statistics and Programme Implementation Friday, the IIP for April had a growth rate of 1.4%, significantly down from 6.2% for the corresponding month last year.
The ministry also revised the estimated negative growth for March to 0.75% from the earlier negative figure of 2.3%.
During April, the growth of the manufacturing sector, with a weightage of 79.4%, slowed down considerably to 0.7%, compared to 6.7% in April of the preceding year, while the power sector recorded a significant growth of 7.1%, compared with 1.4% for the corresponding month last year. The growth rate of the mining sector drastically slowed to 3.8% from 6.1% in April last year.
The revised annual growth in the manufacturing, power and mining sectors during April-March 2008-09 over the corresponding period of 2007-08 were 2.5%, 2.8% and 2.6% respectively, which moved the overall growth in the General Index to 2.6%, keeping the revised annual growth for the period April-March 2008-09 at 2.6%, compared to 8.5% for the corresponding period of the preceding year
In industries, 11 out of the 17 industry groups showed a positive growth in April, compared to the corresponding month of the preceding year. The industry groups consisting of 'Furniture and Fixtures', showed the highest growth of 31.4%, followed by 12.6% in 'Wool, Silk and Man-made Fibre Textiles' and 10.2% in 'Non-Metallic Mineral Products'. On the other hand, ' Food Products' showed a negative growth of 34.4%, followed by 12.4% in 'Leather and Leather and Fur Products', and 5.1% in 'Other Manufacturing Industries'.
As per the use-based classification of the IIP, the capital goods sector registered a negative growth in April at 1.3%, compared to a positive growth of 12.4% in April last year.
The IIP stated that during April, the growth of basic goods slowed to 4.6%, from 4% in the corresponding month of the preceding year. Intermediate goods also had a growth rate of 7.1%, compared to 3.1% for the same month in April last year.
In April this year, the growth rate of the consumer durables sector increased to 16.9% from 3.2% in April of the preceding year. The growth rate of non-durables showed a negative growth rate of 10.4%, compared to a positive growth of 10% for the same month last year. As a result, the growth rate of overall consumer goods witnessed a negative growth of 4.7%, compared to a positive growth of 8.5% last April.
Along with the Quick Estimates of IIP for April, the indices for March underwent the first revision, while those for January had the second and final revision, in the light of the updated data received from source agencies.
In the very first month of this fiscal, the growth rate in six core-infrastructure industries, having a combined weight of 26.7% in the IIP, was 4.3%, compared to 2.3% in April 2008, mainly driven by coal, electricity and cement sectors.
Nikhilesh Bhattacharyya, Moody's Economy.com economist, said that April's industrial production data point tentatively to stabilization for the industrial sector. Demand for the industrial sector's consumer goods appeared to remain weak, but this was offset by government infrastructure and construction projects.
For January-March 2008, the Central Statistical Organization revised downwards the growth numbers of two key sectors-- agriculture and construction--which helped the Indian economy register a better-than-expected growth of 5.8% in the fourth quarter ended March 2009. Had these numbers not been revised downwards, the economy would have been at least 50 basis points lower. One basis point is one-hundredth of a percentage point. Agriculture and construction sectors account for nearly 26% of India's output.
Abheek Barua, chief economist, HDFC Bank, said: Some amount of statistical factors also contributed to the GDP figure. But there was some fundamental dimension to the latest GDP numbers for the fourth quarter. Services sector did well, and the decline in the manufacturing sector was not as sharp as it was expected.
Prime Minister Manmohan Singh exuded confidence that India would achieve economic growth of at least 7% during this fiscal, and sought political support to the government's flagship programmes to scale up the growth. He has also promised to allot more resources for sectors like infrastructure and public services.
The economic growth rate, as per the Reserve Bank of India projections, is likely to moderate further to 6% during the current fiscal year.
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