Close on the heels of a gloomy 5 per cent GDP (gross domestic product) growth projection for the current fiscal which the Finance Ministry questioned for failing to reflect signs of an upturn in the economy, the Central Statistics Office (CSO), on Tuesday, handed down more negative data on the macro-economic front to vindicate its advance estimates.
CSO data on the Index of Industrial Production (IIP) released here show that factory output contracted by 0.6 per cent in December 2012 in stark contrast to a growth of 2.7 per cent notched up in the same month a year ago, mainly on account of dismal performance by sectors such as manufacturing and mining which happen to be the primary drivers of overall economic growth.
Moreover, the IIP data also revealed that after a robust 8.3 per cent expansion witnessed in October owing to festival season demand, December is the second consecutive month that growth in industrial production has remained in the negative territory as the contraction in November output stands revised further downwards from (-) 0.1 per cent to (-) 0.84 per cent.
Accordingly, for April-December 2012-13, IIP growth stands reduced to an expansion by a mere 0.7 per cent as compared to a comparatively healthier increase of 3.7 per cent for the same period in the previous fiscal.
Adding further to the gloomy scenario was the CSO’s data on retail inflation based on the consumer price index (CPI) which showed a surge to 10.79 per cent in January from 10.56 per cent in December. While rural consumer inflation inched up to 10.88 per cent from 10.74 per cent month-on-month, urban inflation also rose to 10.73 per cent from 10.42 per cent.
Thus, even as Finance Minister P. Chidambaram disputed the low GDP growth figure while pointing to “some green shoots” of recovery visible, the economic data now available seem to signal the slowdown getting worse in the wake of high inflation in an environment of low growth.
As per the IIP data, the dismal growth was on account of poor performance of mining and manufacturing sectors coupled with decline in production of capital, consumer and intermediate goods showing both a lack of consumer demand as well as investment.
Growth in manufacturing, which constitutes over 75 per cent of the IIP basket, contracted 0.7 per cent in December 2012 as against a growth of 2.8 per cent in the same month a year ago. For the April-December period, the cumulative growth for the sector stands pegged at 0.7 per cent as against 4 per cent growth in the same period of 2011.