The Hindu Business Line : Industrial output surges; manufacturing grows 15.1%

New Delhi June 12 Buoyed by a robust performance by the manufacturing sector, industrial output registered 13.6 per cent year-on-year growth in April this year, compared to 9.9 per cent rise in the same month last year.

However, the pace of growth was lower than the upwardly revised 14.5 per cent growth clocked by the Index of Industrial Production (IIP) in March 2007, according to data issued by the Central Statistical Organisation on Tuesday.

Manufacturing output, which accounts for 15 per cent of the GDP and has 80 per cent weightage in the IIP, rose 15.1 per cent in April, compared to 11 per cent earlier.

The manufacturing sector growth - the second best in a decade after a 17.2 per cent growth registered in November last year - was boosted by strong showing by the consumer non-durables sectors.

Electricity generation in April this year was up 8.7 per cent (5.9 per cent).

Mining remained a drag on the index, rising only 3.4 per cent, the same as last year.

RBI rates

Analysts said that the April 2007 industrial output figures defied apprehensions of a moderation in production growth in the wake of the upping of benchmark interest rates six times by the Reserve Bank of India in the last 18 months.

The surge in industrial growth has, however, triggered concerns regarding the RBI being prompted to raise interest rates again to further curb credit growth.

The GDP of India, which is Asia's third-largest economy, has expanded at an average of 8.6 per cent in the past four years, recording 9.4 per cent in 2006-07. The RBI has forecast 8.5 per cent growth for the current fiscal.

Growth sectors

According to the data, of the 17 groups under the manufacturing index, 16 recorded growth in April 2007 compared to April 2006.

The Wood and Wood Products, Furniture and Fixtures group showed the highest growth of 92.2 per cent, followed by Food Products (55 per cent) and Machinery and Equipment other than Transport Equipment (19.2 per cent).

Deceleration

As per use-based classification of the IIP, industry segments such as basic goods and capital goods witnessed deceleration in growth.

The growth rate of basic goods fell to 8.9 per cent (9.3 per cent), while that of capital goods fell to 17.7 per cent (19.6 per cent).

Intermediate Goods posted good performance, with growth rate rising to 12.6 per cent (8.5 per cent).

The consumer durables sector, which includes goods such as refrigerators and TVs, saw growth rate declining to 5.3 per cent (7.4 per cent). However, the consumer non-durables sector grew 21.9 per cent (9.4 per cent).

Chamber Concern

Expressing concern over the decline in growth of consumer durables, basic goods and capital goods sectors, the CII has pointed to the recent introduction of the monetary tightening measures as a possible reason for the slowdown in these sectors.

The FICCI said that the figures show that the industry is capable of performing even in the face of rising costs and increasing competition from international players.