Effect of second stimulus package to reflect in January data
NEW DELHI: The two stimulus packages to spur sagging demand notwithstanding, the growth in industrial production shrank by two per cent in December last year in the wake of the slowdown owing to the severe global economic downturn.
With industrial growth, as per the index of industrial production (IIP) data, declining for the second time — first time was in October 2008 after a gap of 15 years — during the first nine months of the current fiscal, the Government is expected to revise its growth projection, which was pegged at 4.8 per cent for 2008-09 in Central Statistical Organisation’s advance estimates released earlier this week. Accordingly, the overall GDP (Gross Domestic Product) growth officially projected at 7.1 per cent for the current fiscal is also likely to undergo a downward revision.
The Government, however, is hopeful that the IIP data for January would be better owing to the beneficial lag effect of the second stimulus package which is already being witnessed in certain sectors.
The two-per cent contraction in industrial growth in December, as compared to a robust eight per cent increase in the same month in 2007, was mainly owing to dismal performance of the manufacturing sector, which posted a 2.5 per cent decline in growth.
Within the manufacturing sector, all its segments — consumer durables, consumer non-durables and intermediate goods — witnessed a production slump with the durables bearing the brunt.
Production of consumer durables contracted by a whopping 12.8 per cent in December 2008 as against a rise of 2.8 per cent in December 2007.
The other two segments of industry — mining output and electricity generation — could grow by a mere one per cent and 1.6 per cent in December, respectively, against five per cent and 3.8 per cent, respectively, a year ago.
For the first nine months of 2008-09, industrial growth stood at 3.2 per cent as compared to nine per cent during the same period in the previous fiscal and the advance estimates of 4.8 per cent for the entire current fiscal.