Even as the poor show by manufacturing and mining sectors pulled down the industrial growth rate to 7.8 per cent in 2010-11 from 10.5 per cent in 2009-10, the silver lining is the vastly improved performance during March this year, which is being viewed as a ‘turnaround' for the current fiscal.
The quick estimates of the Index of Industrial Production (IIP) released here on Thursday by the Central Statistical Organisation revealed that the industry's standalone performance during March has been the best since October 2010 with a growth of 7.3 per cent, way above the dismal 3.6 per cent notched up in February.
After posting a robust expansion of 11.29 per cent in October last year, industrial growth had slumped for four straight months to below 4 per cent from November onwards, mainly owing to a sharp fall in manufacturing output, which accounts for nearly 80 per cent of the IIP basket.
The growth in factory output plunged to 2.7 per cent in November, slipped further to 2.5 per cent in December and then gradually improved to 3.95 per cent in January and to 3.6 per cent in February this year.
Commenting on the IIP data, Finance Minister Pranab Mukherjee noted that the improvement in March was not ‘totally unexpected' after four months of low growth. “Some improvement has taken place on the figures. I expected a little more but whatever is a fact, we shall have to accept it,” he said although he felt that the annual growth should also have been more.
However, Finance Ministry's Chief Economic Adviser Kaushik Basu viewed the IIP's March figures with greater satisfaction.
“After looking at these numbers, I feel a bit better. Industrial production was doing badly for four months. This is a turnaround after that,” he said.
Apart from the turnaround from a four-month span of low growth, an important aspect is that though the growth posted in March this year is just about a half of the 15.5 per cent expansion recorded in March 2010, the upward trend has been despite effect of a high base.
Harping on this fact, Planning Commission Deputy Chairman Montek Singh Ahluwalia said: “The 7.8 per cent is not a big surprise. It is roughly what we thought it would be.
“The important thing is that the monthly numbers have shown a significant improvement and that is welcome.''
Even as 13 out of 17 industry groups posted positive growth in March this year, the official data shows that the annual growth in manufacturing declined to 8.1 per cent in 2010-11 from 11 per cent in the previous fiscal. For the month of March alone also, the sector's production increase was lower at 7.9 per cent as compared to the16.4 per cent expansion achieved in March 2010.
Capital goods
Among the various segments of manufacturing, capital goods were one of the worst affected to register a growth of 9.3 per cent in 2010-11 as against a healthy 20.9 per cent increase in the previous fiscal. As for March alone, the growth in capital goods output slipped to12.9 per cent this year from 36 per cent in the same month of 2010.
Likewise, the mining sector also witnessed a fall in growth to 5.9 per cent in 2010-11 from 9.9 per cent in 2009-10. In March this year, it saw a mere 0.2 per cent growth as compared to 12.3 per cent in the same month of 2009-10.
The growth in electricity generation also slowed down to 5.6 per cent in 2010-11 from six per cent in 2009-10 while in March this year the sector posted a growth of 7.2 per cent as compared to 8.3 per cent in the same month of 2009-10.
PTI reports:
While lauding the better-than-expected 7.3 per cent industrial growth in March, industry bodies, however, expressed concern over the slump in the manufacturing segment and the rate hikes on account of Reserve Bank of India's monetary measures.
