Actual IIP numbers not very low as manufacturing growth evens out: RBI

Though IIP numbers have been on a downhill since last November, with February figures touching a nadir at 3.6%, RBI today said manufacturing activity has been evenly spread out during the last fiscal.
    
"One notable feature of pattern of Index of Industrial Production (IIP) growth is that manufacturing activity has become more evenly spread with 15 of 17 industries recording positive growth in the April-February period of FY11.
    
"Moreover, contribution of the bottom 12 industries to overall IIP growth has risen," the Reserve Bank said in its 'Macroeconomic and monetary developments report for FY11, which was released here on the eve of annual policy.
     
The report said while growth rate of top 5 industries during April-February of FY11 was 20.8% against 25.4% year-on-year, growth rate of bottom 12 items stood at about 6% during the reporting period.
     
It further noted that the relative contribution of the top 5 industries to growth in the reporting period was 37.4% in FY11 against 71.8% in FY10, while that of the bottom 12 stood at 62.6% in FY11 and 28.2% in FY10.
       
Noting that massive dip in IIP from November-February period was exacerbated by a few industries, the report said, if the IPP numbers are calculated after excluding the top 10 and the bottom 10 items that tend to disproportionately impact the overall IPP numbers due to high volatility, February 11 IIP would be close to 8.8% vis-à-vis 8.7% in January 11 and 11.2% in February 10.
       
"This suggests that the deceleration is not as pronounced as it may appear from the headline numbers. But the risk to industrial growth remains with deceleration in output of capital goods," the report says.
       
However, the report notes that growth of six core sectors, which have 26.6 per cent weight in the overall IIP basket, grew only marginally, primarily pulled down the power sector which was impacted by coal shortage, the report concluded.