The trend in the industrial production index, prima facie, indicates a slowdown, with the growth rate showing a sharp deceleration to 5.3% in January 2008 from 11.6% a year ago.
Industrial tempo slackens, but remember the high-base effect l Capital goods’ 18.3% trend growth impressiveThe trend in the industrial production index, prima facie, indicates a slowdown, with the growth rate showing a sharp deceleration to 5.3% in January 2008 from 11.6% a year ago, with all the three major components reporting a lower order of increase — manufactures to 5.9% from 12.3%, mining to 1.8% from 7.7% and electricity to 3.3% from 8.3%.
The setback in January 2008 is somewhat exaggerated because the general index as well as the sub-group indices for mining and manufacturing for January 2007 has been revised upwards — the figures that are used to derive the percentage change in the latest month.
That the underlying picture is still satisfactory is evident from the fact that the average growth in the industrial index during the April-January, 2007-08, is gratifying at 8.7%, even though it is 2.5 percentage points less than what was registered during the same period of 2006-07.
The ten-month data, taken together, denote a moderation of sorts but not a recession; behind the monthly blips, the numbers suggest that the tempo of industrial output is being maintained at close to 9%, despite the dragging effect of the high base; for the sub-group, manufactures — the dominant constituent — the average output has risen by 9.2% during April 2007-January 2008, on a par with its performance in 2004-05 and more or less in conformity with the official target.
In the case of mining, production growth during this period is only marginally down to 4.6% from 4.8% last year.
In power generation, the dip in growth rate is more pronounced at 6.3% compared with 7.6%.
In respect of the average growth rate during the first ten months of the current fiscal, an upward revision of the figures during the same period of 2006-07 has tended to depress the actual performance.
That is to say, the overall pace of improvement in the industrial output index during the current year would have been higher than what is revealed by the official data, namely 8.7%, but for the base effect.
According to the use-based classification of the industrial production index, capital goods segment continues to be a star performer.
On top of an impressive growth of 18.3% during the April-January 2006-07, this year too, it has maintained the same rate of incremental growth.
This reflects two things — the demand for investment goods is strong and that industries have embarked upon an expansion of their productive capacities.
In effect, the foundation is being laid for a more vigorous manufacturing activity in the period ahead.
In both basic and intermediate goods, the incremental increase thus far in the current fiscal year has proceeded at a somewhat lesser pace than what was noted last year; nonetheless, the rate of growth is satisfactory in respect of both —- 7.4% as against 10% for basic goods, and 9.3% as against 11.6% for intermediate goods.
In the consumer goods segment, a mixed pattern is to the fore.
While the heavyweight- consumer non-durables is maintaining a robust rate of growth in production —- 8.6% during the April-January, 2007-08, period as compared to the preceding year’s 9.4% —- the trend is rather disconcerting in the consumer durables sub -sector; here, the cumulative output is 1.7% lower than what it was a year ago when it had fared extremely well with a spurt of 10.6%.
Consequently, the consumer goods sector as a whole has put up a disappointing show this year with a jump of only 5.9% in production; this is far below the 9.7% climb recorded a year ago.
At the two-digit level of classification, the broad picture is gratifying in that most of the industry groups are in the positive territory in the matter of production growth rate this fiscal.
A host of industries —- food products, beverages and tobacco, jute, wood products, leather goods, basic chemicals, basic chemicals, rubber & plastic, non-metallic mineral products, basic metals and alloys and machinery & equipment —- have boosted their production performance by a fair to good margin.
There were a few laggards like metal products, transport equipment, paper and cotton, wool and silk textiles.
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