Maintaining the robust trend of double-digit expansion for the eighth month in a row, industrial growth nevertheless slipped from 16.52 per cent in April to 11.5 per cent in May this year, despite a healthy show by the manufacturing sector.
According to the IIP (Index of Industrial Production) data released here on Monday, the manufacturing sector, which accounts for nearly 80 per cent weight in the index, grew by 12.3 per cent while its sub-segments — capital goods and consumer durables — witnessed a growth of 34.3 per cent and 23.7 per cent, respectively, during the month.
Apart from the low base effect fall-out as a result of the 2.1 per cent growth posted in the same month in 2009, the 11.5 per cent expansion in the IIP is a reflection of the recovery in capital investment by companies as well as higher consumer spending.
The industrial growth figure for April also stood revised downwards from the provisional 17.6 per cent to 16.52 per cent and, as a result, the cumulative growth during April-May is pegged at 14 per cent as compared to a dismal 1.4 per cent notched up in the same period last year.
Seeking to explain the reason for the slippage in industrial output growth in May as compared to the first month of the current fiscal, Finance Secretary Ashok Chawla said: “Nobody should expect that the manufacturing sector will continue to grow at abnormally high numbers for a long time to come. There are capacity constraints ...”
Mr. Chawla argued that “whatever output lag was there in the economy has been filled and the manufacturing sector is now showing the kind of average secular growth which continues to be good and would be favourable for the economy.”
Agreeing with the government's view, ICRIER's Chief Executive Rajiv Kumar felt that the IIP growth numbers were coming back to the normal level of 10-12 per cent. “The increase in the capital goods segment is a good sign. What this means is that there is investment demand and so we can expect a growth in investments in the coming months,” he said.
The IIP data revealed that while the mining sector grew by 8.7 per cent in May as compared to 3.4 per cent a year ago, electricity generation went up by 6.4 per cent as against three per cent growth in May 2009. Consumer non-durables in the manufacturing sector posted a modest expansion of 2.4 per cent during the month.
PTI reports:
Fearing that industrial growth may decelerate in the coming months, the Federation of Indian Chambers of Commerce and Industry urged the Reserve Bank of India not to take any steps that may have an adverse bearing on the manufacturing sector.
