LD-IIP

New Delhi, Jan 12 (PTI) Indian Industrial growth plunged
to an 18-month low of 2.7 per cent in November, 2010 from over
11 per cent recorded in the previous month, which may make a
strong case for continuation of stimulus in the Budget.
The sharp deceleration in November figures was because of
just 2.3 per cent growth in manufacturing, which constitute
around 80 per cent in the Index of Industrial Production
(IIP) that measures the expansion in factory production.
The part of decline in industrial growth could be due to
high base effect of 11.3 per cent in November, 2009, but
Finance Minister Pranab Mukherjee refused to take cover behind
this statistical technicality.
"Last time, if you have noticed that in November last
year it(IIP) was very high, so base effect is also there, but
that is no consolation," he said.
However, the Reserve Bank is likely to up policy rates as
inflation has assumed bigger concern, analysts said, even
though industrialists cautioned the central bank from taking
such a step.
The Finance Minister promised corrective action to push
up industrial growth. "We shall have to look into and take
corrective measures so that IIP numbers revive in the
remaining four months," he said.
Tuesday, industrialists met the Finance Minister for
pre-budget interactions and pitched for retaining stimulus.
They exuded confidence later that Mukherjee may agree to their
demands.
Yes Bank chief economist Shubhada Rao said,"I think
stimulus will continue."
Mining output registered a growth of six per cent in
November, against 10.7 per cent recorded last year. However,
Electricity generation rose by 4.6 per cent from 1.8 per cent.
Within manufacturing, consumer non-durable goods
production contracted by six per cent in November, 2010, while
consumer durables rose by just 4.3 per cent against a whopping
36.3 per cent in November, 2009.
Capital goods, which is required for future expansion of
industry, expanded by 12.6 per cent in November over 11 per
cent a year ago.
With this, indutrial growth stood at 9.5 per cent during
the first eight months of this fiscal, against 7.4 per cent a
year ago.
As many as nine out of 17 industry groups registered a
negative growth in November, 2010.
Economists expect Reserve Bank of India to nonetheless up
policy rates at its January 25 quarterly policy review to
fight inflation.
"Inflation is a concern. We expect RBI to go for monetary
tightening. RBI does not go by month-to-month data," Crisil
chief economist D K Joshi said.
In fact, the plan panel also does not seem to be
perturbed by sharp dip in industrial growth in November. MORE
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