Factory output slips to 3.4 p.c. in June

During the April-June period of the current fiscal, IIP has recorded a growth of 3.9 per cent, as against contraction of 1 per cent in the first quarter of 2013—14.

August 12, 2014 08:38 pm | Updated November 16, 2021 07:06 pm IST - New Delhi:

Industrial output growth slowed to 3.4 per cent in June from 4.7 per cent in May. Cumulative growth in the first quarter of the current fiscal stood at 3.9 per cent against a contraction of (-) 1 per cent in the year-ago period, indicating a considerable improvement in business sentiment.

Smart turnaround incapital goods sector The performance of the consumer goods sector, however, worsened during April-June 2014 compared with the same period last year indicating that consumer spending has not yet picked up. Capital goods production, a barometer for investments, however, delivered a smart turnaround.

The recovery is led primarily by the robust 11.3 per cent growth in electricity generation as against 3.5 per cent during April-June 2013, according to official data released here on Tuesday. Mining and manufacturing output, too, grew though not as spectacularly.

Base effect The growth data also reflects considerable base effect. Mining and quarrying output grew 3.2 per cent. It had shrunk (-) 4.6 per cent during the first quarter last year.

Factory production rose 3.1 per cent against a contraction of (-) 1.1 per cent in April-June 2013, attributing to the base effect in the overall numbers for the Index for Industrial Production (IIP).

Output of consumer durable goods declined by (-) 9.6 per cent while consumer non-durables production rose only marginally by 0.7 per cent.

As a result, the overall growth in the production of consumer goods shrank (-) 3.6 per cent in the first quarter against a contraction of (-) 2.1 per cent witnessed in the same period last year.

Capital goods production grew 13.9 per cent as against a negative growth of (-) 3.7 per cent in the first quarter of the last year.

The smart turnaround came mainly due to the growth in the output of electrical machinery that grew at the rate of 56.6 per cent.

Overall, 15 industries registered positive growth during the quarter, including electrical machinery and apparatus (56.6 per cent) followed by tobacco products (14.8 per cent) and luggage, handbags, saddlery, harness and footwear; tanning and dressing of leather products (8.8 per cent).

Of the total 22 industries for which data is collected, seven showed a decline in output growth.

These include radios, TVs and communication equipment that declined the sharpest ((-) 47.3 per cent), followed by office, accounting and computing machinery ((-) 41.6 per cent), wearing apparel, dressing, and dyeing fur ((-) 8.6 per cent) and motor vehicles, trailers and semi-trailers ((-) 6 per cent).

‘An aberration’ Commenting on the IIP figures, Confederation of Indian Industry (CII) Director-General Chandrajit Banerjee said that after the good performance in the previous two months, the decline in June was due to the sluggishness in the manufacturing sector and, therefore, the dip in the latest data was in all probability an aberration. He said that the CII’s own Business Outlook Survey showed early signs of an industrial turnaround.

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