IIP back to double-digit growth
BS Reporter / New Delhi October 13, 2007
Reversing a four-month trend, industrial growth rose sharply this August, pushing the Index of Industrial Production (IIP) back to double digits for the first time since June.
The rebound came on the back of robust manufacturing production, especially in capital goods. Even mining, which had lagged significantly, recorded a massive and unexpected growth during the month.
Mining accounts for 10.47 per cent of the index of which coal and crude oil account for the bulk.
The IIP rose 10.7 per cent this August against 10.28 per cent a year ago. Overall, for the first five months of the current fiscal, industrial growth stood at 9.8 per cent.
Manufacturing, which accounts for nearly 80 per cent of the index, grew 10.4 per cent in August, against 11.94 per cent in 2006. Although this is much better than the growth in the previous two months, it is lower than last year.
The good showing by manufacturing was dented only by consumer goods that continue to reel under the impact of high interest rates.
The sector grew 0.5 per cent in August against 5.69 per cent in July and much lower than a year ago. This is the lowest growth rate the segment has seen so far.
Experts said the decline in consumer goods was a cause for concern. “This indicates a slowdown in consumption,” said Siddhartha Roy, economic advisor, Tata group.
Story Comments
Total Post : 2
Posted By : anjalir on 13 October,2007
A good sign!! After registering a single digit growth in July 2007,growth exceeded expectations in August, accelerating for the first time in five months, as record investment in factories, roads and power plants boosted demand for cement and steel. The continuous slowdown in inflation, more efforts towards infrastructure development, rising income leading to rise in demand has all led to rise in IIP. The growth in IIP in August 2007 has rebuild more confidence in Indian growth story.
The rebound came on the back of robust manufacturing production, especially in capital goods. Even mining, which had lagged significantly, recorded a massive and unexpected growth during the month.
Mining accounts for 10.47 per cent of the index of which coal and crude oil account for the bulk.
The IIP rose 10.7 per cent this August against 10.28 per cent a year ago. Overall, for the first five months of the current fiscal, industrial growth stood at 9.8 per cent.
Manufacturing, which accounts for nearly 80 per cent of the index, grew 10.4 per cent in August, against 11.94 per cent in 2006. Although this is much better than the growth in the previous two months, it is lower than last year.
The good showing by manufacturing was dented only by consumer goods that continue to reel under the impact of high interest rates.
The sector grew 0.5 per cent in August against 5.69 per cent in July and much lower than a year ago. This is the lowest growth rate the segment has seen so far.
Experts said the decline in consumer goods was a cause for concern. “This indicates a slowdown in consumption,” said Siddhartha Roy, economic advisor, Tata group.
Story Comments
Total Post : 2
Posted By : anjalir on 13 October,2007
A good sign!! After registering a single digit growth in July 2007,growth exceeded expectations in August, accelerating for the first time in five months, as record investment in factories, roads and power plants boosted demand for cement and steel. The continuous slowdown in inflation, more efforts towards infrastructure development, rising income leading to rise in demand has all led to rise in IIP. The growth in IIP in August 2007 has rebuild more confidence in Indian growth story.
Posted By : anjalir on 13 October,2007
However, the high interest rates have hit the consumer durable segment, which has registered a decline in August. Also the continuous appreciation in rupee and excess liquidity in the market is a cause of concern. RBI may increase the CRR to curtail the liquidity in the system after having low inflation and impressive IIP figures. But the central bank has to look at the decelerating credit offtake from banks which may further get affected because of CRR hike.
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