India's Index of Industrial Production, or IIP, continued to fall for the third time in four months in March from a year earlier, mainly pulled down by the negative contribution from manufacturing, capital goods, as also overall consumer goods sectors, despite electricity and mining sectors reporting growth.

As per the data released by Central Statistical Organization of the Ministry of Statistics and Programme Implementation Tuesday, the IIP for March witnessed a negative growth rate of 2.3%, compared to the positive 5.5% for the corresponding month last year.

However, the ministry revised the estimated negative growth for February to 0.70% from the earlier negative figure of 1.20%.

During March, the manufacturing sector, with a weightage of 79.4%, showed a negative growth rate of 3.3%, compared to a positive growth of 5.7% in March of the preceding year, while the power sector recorded a significant growth of 6.3%, compared with 3.7% for the corresponding month last year. The growth rate of the mining sector drastically slowed to 0.4% from 4.9% in March last year.

As for industries, 5 out of the 17 industry groups showed a positive growth in March, compared to the corresponding month of the preceding year. The industry groups consisting of 'Beverages, Tobacco and Related Products' showed the highest growth of 15.1%, followed by 8.3% in 'Basic Chemicals & Chemical Products (except products of Petroleum and Coal) and 7% in 'Transport Equipment and Parts''. On the other hand, the industry group ''Food Products showed a negative growth of 35.8%, followed by 25.1% in ' 'Furniture' and 19.7% in 'Other Manufacturing Industries.'

As per the use-based classification of the IIP, the capital goods sector registered a negative growth in March at 8.2%, compared to a positive growth of 20.3% in March last year.

The IIP stated that during March, the growth of basic goods slowed to 1.4%, from 3.3% in the corresponding month of the preceding year. Intermediate goods also had a negative growth rate of 4.4%, compared to a positive growth of 4.9% for the same month in March last year.

In March this year, the consumer durables sector had a positive growth rate of 8.3%, compared to a negative growth of 2% in March of the preceding year. The growth rate of non-durables showed a negative growth rate of 3.6%, compared to a positive growth of 1.9% for the same month last year. As a result, the growth rate of overall consumer goods witnessed a negative growth of 0.8%, compared to a positive growth of 0.9% last March.

For the first 12 months of this fiscal, the rate of the IIP growth was 2.4%, a significant drop from the revised figure of 8.5% for the comparable period last year.

During this April-March, the growth rate of the manufacturing sector decelerated to 2.3% from 9.0% in the first twelve months of fiscal 2008, while that of the mining sector slowed down to 2.3% from 5.1% for the first 12-month period of the last fiscal. The growth of the power sector also grew to 2.8% from 6.4% for the corresponding period last year.

Along with the Quick Estimates of IIP for March, the indices for February underwent the first revision, while those for December last year underwent the second and final revision, in the light of the updated data received from source agencies.

During March, the growth rate in six core-infrastructure industries, having a combined weight of 26.7% in the IIP, was 2.9%, flat with last year.

During the first 12 months of this fiscal, the six core-infrastructure industries registered a growth of 2.7%, down from 5.9% during the corresponding period of the preceding year.

Shubhada Rao, Chief Economist, Yes Bank, said, The IIP data have come in lower than our expectations. The past upward revisions however provide some comfort. We see a recovery in IIP led by consumption in the near term. Overall for fiscal 2010, our growth projection for IIP is at 3.5%. we are likely to see growth in positive zone from April onwards. However, a meaningful recovery is likely to take place only during the second half of fiscal 2010.

On the other hand, D K Joshi, Principal Economist, Crisil, Mumbai, said, Look at the environment around you. Chances of revival in export demand are very little in the near term. There is also no evidence of domestic revival. I expect industrial output to be near this trough for the next couple of months.

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