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In a clear sign that a slowdown is taking roots in the economy, the index of industrial production rose a measly 4.1% in August — the second successive month of a dismal show.

What makes the growth rate for themonth even more depressing is that, unlike in July — for which the revised growth rate stands at 3.8% instead of the earlier 3.3% — when the high base of the year ago (10%) had a dragging effect, in August 2010, the spurt was a modest 4.5% and despite this, the growth rate was on a downhill path a year later.

Also, though officially the August industrial growth is put at 4.1%, in reality it works out to 4%. This is not a difference between tweedledum and tweedledee, as in a regime of low numbers, even fractional variations matter. Thus, there is an element of exaggeration in the government release on the increase in factory output at the aggregate level during the latest month.

As per the sectoral classification, both the heavyweights — manufacturing and mining segments — had fared rather poorly during August. In fact, mining output had declined vis-a-vis the year ago, while in manufacturing, there was further deceleration to 4.5% from the already niggardly 4.7%. In electricity, the generation had vaulted by 9.5% from 1%.

The use-based classification of the industrial index brings out the fact that, during August 2011, both capital goods and consumer goods were characterised by poor volume growth and this has come on top of an equally uninspiring showing during the same month of the previous fiscal.

The incremental growth had slowed down to 3.9% from 4.7% in the case of capital goods and to 3.7% from 4.6% in consumer goods. This, perhaps, is an indication that both investment demand and consumer demand in the economy is ebbing.

Another straw in the wind that industrial slowdown may be underway is adduced by the pronounced slackness in regard to intermediate goods - items than figure in the final stage ofmanufacture and theirproduction and stocking is crucial for sustaining factory activity.The low level of output of this group of products- the rise in August 2011 was a mere 1.3% from the year ago level of 5.8% - coming on top of none-too-good numbers in the preceding months, may also have an adverse impact on the industrial growth in the coming months. Within the consumer goods sector, the production trend in both durables and non-durables was subdued during the month.In basic goods, dynamism is conspicuous by its absence.

Reflecting the generally cheerless industrial performance, the average growth during the first 5 months of the current fiscal year stood markedly lower at 5.6% than 8.7% for the same period of 2009-10. In the pivotal manufacturing, the April-August 2011 average growth was 6% as against 9.2% in the preceding year.

The average growth now had also lagged behind last year’s in respect of capital goods, intermediate goods and consumer goods. Basic goods and non-durables within the consumer goodswere exceptions to this trend.

Synoptically, at the 2-digit level of classification of the industrial index which has 22 groups,during August 2011, as many as ten had recorded a decline in production over the year ago while another 7 had shown an increase of 8% or more; for the period, April-August 2011, both the number of industry groups notching up a negative growth in output as well as registering a jump of 8% or more hadnumbered 7 each.