The growth rate in industrial production moved to positive terrain in August with an expansion of 2.7 per cent after two consecutive months of contraction.
The overall 2.7 per cent growth in factory output, as measured by the Index of Industrial Production (IIP), is lower than the 3.4 per cent increase recorded in August 2011. The silver lining is the signal of a turnaround in the wake of contraction by 0.18 per cent in July and by 1.8 per cent in June.
Cumulative IIP growth during April-August stands pegged at 0.4 per cent, way below the 5.6 per cent increase achieved in the same period last fiscal.
Manufacturing output grew by a mere 2.9 per cent in August as compared to 3.9 per cent increase logged for the same month a year ago. Prime Minister’s Economic Advisory Council Chairman C. Rangarajan said: “IIP numbers indicate there is some turnaround as far as manufacturing sector is concerned. I do expect, in coming months, the growth rate will further pick up and for [the fiscal] year as a whole, we can still see manufacturing growth at 3-4 per cent.”
As per the official data, while the output of capital goods contracted by 1.7 per cent in August, 2012, as compared to a growth of 4 four per cent in the same month last year, consumer goods production was up 5 five per cent during the month, marking an increase from the meagre growth of 2.1 per cent in same month of 2011. In all, 13 of the 22 industry groups in the manufacturing sector showed positive growth during August this year.
As for the other two components in the IIP, while mining output went up by 2 two per cent in August as compared to a negative growth of 5.5 per cent in same month last year, growth in electricity output slumped sharply to 1.9 per cent in August, from 9.5 per cent a year ago.
India Inc., which has been lobbying for easing interest rates for quite some time, expressed disappointment over the IIP numbers and reiterated its demand for a cut in key policy rates by the RBI to help kick-start investments.