The Hindu Business Line : April industrial growth at 1.4% hints recovery

Although modest, it is better than the preceding four months’ numbers of minus 0.75 per cent, minus 0.72 per cent, 1.03 per cent and minus 0.25 per cent respectively.

The latest number holds hope that the worst is over and the economy is on a recovery mode.

The 1.43 per cent annual rise in the Index of Industrial Production (IIP) in April – against 6.22 per cent during the same month last year – has been led mainly by electricity and mining. These two sectors have grown by 7.06 per cent and 3.8 per cent, as compared with their corresponding April 2008 year-on-year increases of 1.39 per cent and 6.14 per cent respectively.

The somewhat-decent growth rates for electricity and mining have, however, been offset by the continuing poor performance of manufacturing.

The manufacturing index has grown by a measly 0.70 per cent (against 6.7 per cent in April 2008), which is just a shade better than the minus 1.65 per cent in March and minus 0.88 per cent in February. Again, the best one could say about the sector is that it has “bottomed out” and improvement is in sight.

Within manufacturing, it is ‘consumer durables’ that has notched up an impressive 16.89 per cent growth rate in April (against 3.25 per cent for the same month last year). The sub-sector had grown by 8.18 per cent in March, 5.83 per cent in February and 2.06 per cent in January, indicating that it is clearly out of the woods now.

The same cannot be said though about ‘capital goods’, the index of which fell year-on-year for a second successive month by minus 1.28 per cent in April and minus 8.39 per cent in March (it had risen 12.43 per cent last April). Decline in production of capital goods is indicative of slack investment demand among corporates, the revival of which will probably require a sustained economic recovery.

Among other ‘use-based’ sectors, the index for ‘basic goods’ went up by 4.56 per cent in April (versus 3.99 per cent in April 2008), with these correspondingly standing at 7.12 per cent (3.09 per cent) for ‘intermediate goods’ and minus 10.39 per cent (9.96 per cent) for ‘consumer non-durables’.

Individual industry data at a two-digit level of the IIP shows textiles, leather, food products and paper to be the worst-performing. Production of cotton textiles was up by only 0.8 per cent in April (after the minus 2.1 per cent average for the 2008-09 fiscal), while the corresponding amounts were minus 34.4 per cent (minus 9.5 per cent) for food products, minus 12.4 per cent (minus 6.9 per cent) for leather products and minus 2.3 per cent (1.6 per cent) for paper.

On the other hand, ‘machinery & equipment’, ‘transport equipment & parts’, ‘non-metallic mineral products’ and ‘basic metal and alloy industries’ have grown by 9, 6.3, 10.2 and 5.1 per cent, respectively.

Related Stories:
Do IIP figures negate GDP growth estimate?
Analysts discount negative IIP nos
Industrial output dips 2% in Dec
Industrial output contracts 2.3% in March; poor show by manufacturing
Industry on road to recovery; output nearing last year’s high