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Investment goods output sustained at a high level

Though a slowdown of sorts is evident from the official data just released for the first six months of the current fiscal, still the tempo of industrial production growth is satisfactory.

At 9.2%, the average increase thus far is lower than what it was during the same period of 2006-07-11.1%. But such ups and downs in performance are only to be expected and the fact that the growth rate hovers around 10% is gratifying.

More important, industries that matter from the long-term point of view-basic goods, investment goods and intermediate goods-have fared well in terms of production during the April-September 2007 period; also, a very good show was put up by non-metallic industries during this period and the same trend is evident in power generation.

All these are critical to the performance of other industries; this augurs well for the second half of the current year on the industrial front.

In respect of manufacturing, the average rise in production during the first six months worked out to almost 10%-though less than the spurt of 12.3% a year ago, it is a shade higher than the jump of 9.5% two years ago.

Among the other two major components of the index of industrial production, mining and quarrying growth accelerated to 5.3% in the current fiscal from 3.1% last year while electricity generation also was up-to 7.7% from 6.6%.

But, with manufacturing accounting for a lion’s share of the total weight in the industrial index, the mild setback in this sector was responsible for the slackening in the rate of overall industrial production.

Seen in perspective, the broad trend is satisfactory.Delving deeper in to the industrial output data suggests that the broad-based nature of the industrial growth this year.

A majority of industries have recorded a good rate of growth while the laggards were only as few in number. During the April-September 2007 period, the average increase was markedly higher in food products (13.3%), beverages and tobacco (8.3%), jute and related fibre textiles (18.9%), rubber and related items (12.0%), non-metallic products (8.3%), basic metals (18.5%) and machinery equipment (10.9%). But a tepid show was seen in paper where the growth rate was a meagre 1.1%, metal products and parts (-0.8%) and transport equipment (1.7%).

The analysis of the industrial index in terms of a use-based classification strongly suggests that that the overall industrial scenario is reassuring.

In the case of basic goods, the average increase in production was of the order of 9.4% as compared to 8.8% a year ago; in capital goods, the tempo increased to 19.6% from last year’s 17.5%.

The sustained high order of output increase in respect of investment goods is suggestive of what is in store-a heightened level of activity in the industrial sector in the months ahead.

In intermediate goods too, the order of improvement seen so far-9.5%-is only fractionally less than that of last year-10.9%.

The only exception to the generally satisfying picture is the performance of the consumer goods sector during the first half of 2007-08. At 5.5%, the growth rate was less than half of what was registered a year ago.

Within this segment, the more important group-consumer non-durbales-has fared rather well, with the average jump in output being satisfactory at 8.4% (10.2%, a year ago) while the output of the consume durables sector nose-dived to negative territory. At (-)3.2%, the setback is sharp when compared to the first half of 2006-07 when this sector reported an impressive rise in output at 15.2%.