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12312
Sat, 07/12/2008 - 13:58
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https://oananews.org//node/12312
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Industrial growth slows down to 3.8% in May
New Delhi, July 11 (PTI) Industry continued to bear the brunt of rising interest rates as its growth plummeted to 3.8 percent in May against 10.6 percent a year-ago as both manufacturing and electricity generation rose by a decelerated rate.
This is the second month in a row this fiscal that the industry performed poorly with industrial growth, as reflected by the Index of Industrial Production (I.I.P.), dipping to 5 percent in April-May against 10.9 percent a year-ago.
Manufacturing grew by a modest 3.9 per cent in May against 11.3 per cent a year-ago. However, consumer durables came out from negative growth to show 4.4 percent rise against a fall of 0.7 percent in May 2007.
Electricity generation, a key resource for the economy, plunged to 2 percent from 9.4 percent.
"I think the downtrend will continue because of overall contraction in economy. Toplines are coming down because of higher interest rates and credit squeeze, while bottomlines are coming down because of higher wages," ICRIER Director Rajiv Kumar said.
However, mining output showed an upward trend, growing by 5.2 percent in May against 3.8 percent a year-ago.
With inflation continuing to scale a new 13-year high andindustry showing slackness, the R.B.I. could be in a dilemma to boost growth or check inflation.
"It (industrial slowdown) is a matter of concern . It will pose further dilemma for policy makers," Yes Bank Chief Economist Shubhada Rao said.
However, other analysts opined that the R.B.I. is likely to go for tighter monetary policy to contain inflation, which may further bring down industrial growth.
Among the use-based classification, though the consumerdurables emerged out of the negative growth, capital goods dived to 2.5 percent in May from 22.4 percent in the same period last year.
Basic goods went southwards to 3 percent in May, against 10.3 percent. Intermediate goods grew at a slower pace of 1.2 percent in May as compared to 8.8 percent.
The growth in consumer non-durables sector slowed down to 8.1 percent from 12.1 percent.
In terms of industries, 11 out of 17 industries showed apositive growth. Among them, beverages, tobacco and related products grew at the highest pace at 31.1 percent followed by transport equipment and parts which grew at 12.3 percent.
Basic chemicals and chemical products (except petroleum and coal products) rose to 9.5 percent.
However, food products, jute and other vegetable fiber textiles (except cotton), wood and wood products, rubber, plastic, petroleum and coal products and other manufacturing industries showed a negative growth.
Inflationary spiral and plunging industrial growth have made the Finance Ministry revise its expectations for the economic growth to 8-8.5 percent from 9 percent in the last fiscal.
Meanwhile, Citi group also said that India's economic growth would moderate below 9 per cent this fiscal.
This is the second month in a row this fiscal that the industry performed poorly with industrial growth, as reflected by the Index of Industrial Production (I.I.P.), dipping to 5 percent in April-May against 10.9 percent a year-ago.
Manufacturing grew by a modest 3.9 per cent in May against 11.3 per cent a year-ago. However, consumer durables came out from negative growth to show 4.4 percent rise against a fall of 0.7 percent in May 2007.
Electricity generation, a key resource for the economy, plunged to 2 percent from 9.4 percent.
"I think the downtrend will continue because of overall contraction in economy. Toplines are coming down because of higher interest rates and credit squeeze, while bottomlines are coming down because of higher wages," ICRIER Director Rajiv Kumar said.
However, mining output showed an upward trend, growing by 5.2 percent in May against 3.8 percent a year-ago.
With inflation continuing to scale a new 13-year high andindustry showing slackness, the R.B.I. could be in a dilemma to boost growth or check inflation.
"It (industrial slowdown) is a matter of concern . It will pose further dilemma for policy makers," Yes Bank Chief Economist Shubhada Rao said.
However, other analysts opined that the R.B.I. is likely to go for tighter monetary policy to contain inflation, which may further bring down industrial growth.
Among the use-based classification, though the consumerdurables emerged out of the negative growth, capital goods dived to 2.5 percent in May from 22.4 percent in the same period last year.
Basic goods went southwards to 3 percent in May, against 10.3 percent. Intermediate goods grew at a slower pace of 1.2 percent in May as compared to 8.8 percent.
The growth in consumer non-durables sector slowed down to 8.1 percent from 12.1 percent.
In terms of industries, 11 out of 17 industries showed apositive growth. Among them, beverages, tobacco and related products grew at the highest pace at 31.1 percent followed by transport equipment and parts which grew at 12.3 percent.
Basic chemicals and chemical products (except petroleum and coal products) rose to 9.5 percent.
However, food products, jute and other vegetable fiber textiles (except cotton), wood and wood products, rubber, plastic, petroleum and coal products and other manufacturing industries showed a negative growth.
Inflationary spiral and plunging industrial growth have made the Finance Ministry revise its expectations for the economic growth to 8-8.5 percent from 9 percent in the last fiscal.
Meanwhile, Citi group also said that India's economic growth would moderate below 9 per cent this fiscal.
