The Hindu Business Line : Industrial growth touches 7.9 per cent in July

AMIDST the gloom of wholesale inflation rate touching a three-and-a-half high of 8.33 per cent comes news of Indian industry truly on a roll. The latest `quick estimates' of the official Index of Industrial Production (IIP) for July reveal a year-on-year growth of 7.9 per cent, as against 6.6 per cent for the same month of 2003.

While the index for `manufacturing' grew by 7.6 per cent (8 per cent), those for `mining' and `electricity' went up by 3.7 per cent (2.9 per cent) and 14.1 per cent (1.4 per cent), respectively.

The overall growth rate in the general IIP for April-July 2004 worked out to 7.8 per cent, which is higher than the 5.9 per cent year-on-year increase recorded during the corresponding four months period of 2003.

Moreover, all the three sectors comprising the IIP have registered higher growth rates so far this fiscal — manufacturing (8 per cent vs 6.4 per cent), mining (5.2 per cent vs 4.8 per cent) and electricity (7.9 per cent vs 2.7 per cent).

The `use-based' classification of the IIP provides an equally encouraging picture. The index for `capital goods' — a reliable proxy for investment activity taking place in the economy — has shown a growth rate of 14.7 per cent during April-July 2004 (over and above 9.1 per cent), with this trend continuing in the latest month of July as well (16.2 per cent vs 11.2 per cent). This is consistent with the Prime Minister, Dr Manmohan Singh's, statement last week asserting `buoyancy' in investment climate.

During July 2004, the year-on-year growth rates amounted to 5.7 per cent (4.1 per cent) for `basic goods', 5.4 per cent (7.3 per cent) for `intermediate goods', 15.1 per cent (8.6 per cent) for `consumer durables' and 8.7 per cent (6.7 per cent) for `consumer non-durables'.

For the April-July 2004 period, the growth rates stood at 4.9 per cent (4.4 per cent) in basic goods, while being 9.5 per cent (4 per cent) for intermediate goods, 12.6 per cent (5.1 per cent) for consumer durables and 5.5 per cent (9.9 per cent) for consumer non-durables.