RTTNews - India's Index of Industrial Production, or IIP, for May showed a sign of recovery, despite slowdown in the growth rate of manufacture and mining sectors, as also a drastic fall in that of overall consumer goods .
As per the data released by Central Statistical Organization of the Ministry of Statistics and Programme Implementation Friday, the IIP for May had a growth rate of 2.7%, much lower than the 4.4 % for the corresponding month last year. It, however, was higher than the revised growth rate for April.
The ministry also revised the estimated growth for April to 1.2% from the earlier 1.4%.
During May, the growth of the manufacturing sector, with a weightage of 79.4%, slowed down to 2.5% from 4.5% in May of the preceding year, while the power sector grew by 3.3%, compared with 2% for the corresponding month last year. The growth rate of the mining sector slowed to 3.7% from 5.5% in May last year.
In industries, 9 out of the 17 industry groups showed a positive growth in May, compared to the corresponding month of the preceding year. The industry groups consisting of 'Other Manufacturing Industries' showed the highest growth of 27.3%, followed by 16.4% in 'Rubber, Plastic, Petroleum and Coal Products' and 15.3% in 'Wood and Wood Products; Furniture and Fixtures'. On the other hand, the industry group 'Jute and Other Vegetable Fibre Textiles (except cotton)' showed a negative growth of 20.0% followed by 14.7% in 'Food Products' and 10.3% in 'Beverages, Tobacco and Related Products'.
As per the use-based classification of the IIP, the capital goods sector registered a negative growth in May at 3.6%, compared to a positive growth of 4.3% in May last year.
The IIP stated that during May, the growth rate of basic goods rose to 3.8%, from 3.0% in the corresponding month of the preceding year. Intermediate goods grew considerably by 6.1%, compared to 1.9% for the same month last May.
In May this year, the growth rate of the consumer durables sector significantly increased to 12.4% from 2.8% in May of the preceding year. The growth rate of non-durables showed a negative growth rate of 2.3%, compared to a positive growth of 9% for the same month last year. As a result, the growth rate of overall consumer goods fell drastically to 1.2% from 7.4% last May.
Along with the Quick Estimates of IIP for May, the indices for April underwent the first revision, while those for February had the second and final revision, in the light of the updated data received from source agencies.
During May, the growth rate in six core-infrastructure industries, having a combined weight of 26.7% in the IIP, was 2.8%, compared to 3.1% in May 2008, impacted mainly due to negative contribution from crude oil and petroleum production.
The fiscal 2009-10 budget proposed by Finance Minister Pranab Mukherjee boosted government-spending on infrastructure building, agriculture, exports, on rural jobs, as also easing tax burden on companies and consumers would spur up factory production in India in the coming months.
Montek Singh Ahluwalia, Deputy Chairman of Planning Commission, said: We do believe that the worst is over, but there is a difference between the worst being over and getting back to robust growth. The recovery in monsoon is reducing economic concerns.
Rajeev Malik, a regional economist at Singapore-based Macquarie Group Ltd., said: Industrial activity in India would gain more traction as the favorable effect of lower bank lending rates and a continuing fiscal boost offsets a still-weak export sector. The rise in output pretty much destroys the probability of further rate cuts.
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