Industrial growth turns positive
13 Jun 2009, 0108 hrs IST, TNN
NEW DELHI: The worst is over and the economy is rebounding. After months of contraction, industrial production turned positive and grew 1.4% in
April on the back of a pick-up in domestic demand an outcome of stimulus packages and a good harvest.
The positive April figure is a recovery from negative 0.7% growth in February and 0.8% in March. The March data is a revised figure from -2.3% announced earlier. Considering month-to-month growth (seasonally adjusted), industrial production rose 1.8% in April over March compared to a 0.5% decline in March over February.
However, problem areas remain. The government data released on Friday showed crucial sectors such as consumer non-durables, including processed food products and capital goods, posting negative growth. However, the contraction in the capital goods sector decelerated to 1.3% in April from 8.4% in March. This clearly suggested that investments in the industry has started picking up. Citigroup and Goldman Sachs in their reports said that investments are likely to pick up in the coming months.
The 1.4% growth in April is way behind the 6.2% expansion in industrial activity clocked in the same month last year. No wonder, the good news on industrial production failed to buoy stock markets. The benchmark sensex was down 174 points.
But slowdown in industrial growth, as measured by the Index of Industrial The Economic Times (IIP), appears to be bottoming out. Provisional figures showed industrial contraction for almost every month, after Lehman Brothers filed for bankruptcy in mid-September last year, which started the global financial crisis.
The biggest surprise in IIP data was electricity generation which grew by 7.1% in April against 1.4% in the same month a year ago. Manufacturing, which has a weight of around 80% in the IIP, grew by 0.7% from 6.7% in the corresponding period last year. Mining grew by 3.8% in the month against 6.1% in April 2008.
In contrast, consumer non-durable output shrunk by 10.4% in the period against 10% growth in the same month a year ago. As against this, consumer durable expanded by 16.9% as against 3.2% in the same period last year. The Economic Times of capital goods slid 1.3% against growth of 12.4%. Industry had grown by merely 2.6% last fiscal against 8.5% in the previous year.
As many as 11 out of 17 industry groups posted growth. However, food products continued to contract drastically by 34.4% in April, production of another employment-generating sector, leather, decelerated by 12.4%.
Earlier, six core sectors, which together have a weight of around 27% in IIP, grew by 4.3% in April against 2.3% a year ago.
Industrial growth turns positive - India Business - Business - The Times of India