The industrial production plunged to a 20-month low of 1.6 per cent in December against 18 per cent growth during the same period last year, notwithstanding the 8.6 per cent GDP growth being projected by the government.
Finance Minister Pranab Mukherjee termed the industrial output numbers as ‘disappointment' but said no final view could be taken till annual growth figures were known.
The Index of Industrial Production (IIP) had grown by 18 per cent during the same period last year, making it a daunting challenge to maintain the expansion momentum this fiscal due to the high base.
Industrial growth during April-December this fiscal stood at 8.6 per cent, unchanged in comparison to the corresponding period of the previous year, official data released here on Friday.
The disappointing numbers came just days after the government's prediction of encouraging 8.6 per cent economic growth this fiscal, against 8 per cent in 2009-10. The government also revised upwards the November IIP numbers to 3.6 per cent from the earlier estimate of 2.7 per cent.
The manufacturing segment, which has a weight of about 80 per cent on the IIP, managed to grow barely by one per cent in December against 19.6 per cent growth a year ago. The capital goods sector, reflecting investment, contracted to (-) 13.7 per cent in the said month against an impressive 42.9 per cent expansion a year ago.
“Monthly and weekly numbers do not reflect correct picture. Therefore, you shall have to take the whole year into account. Let us see how it reflects in the annual picture,'' Mr. Mukherjee said terming the December numbers as very unfortunate and disappointing.
Expressing similar views, Planning Commission Deputy Chairman Montek Singh Ahluwalia said month-on-month fluctuations in IIP should not be a cause for concern as the economy, as a whole, was on a healthy growth track. “To achieve 8.5 GDP growth, 8 per cent industrial growth for the whole year (2010-11) is enough,'' he remarked.
Mining growth fell to 3.8 per cent in December from 11.1 per cent in the same period of the previous year. Electricity generation grew by 6 per cent compared to 5.4 per cent.
In terms of industries, 12 out of 17 industry groups achieved positive growth in December.
The data also revealed that consumer non-durables production contracted by 1.1 per cent in December.