Industrial growth drops to 1.6 pc in Dec; lowest in 20 months

New Delhi, Feb 11 (PTI) India's industrial expansion
plunged to a 20-month low of 1.6 per cent in December,causing
a blip in India's growth track, but policy makers remained
unfazed on the prospects of robust GDP numbers for the current
fiscal.
Though the December factory output growth has somewhat
"disappointed" Indian Finance Minister Pranab Mukherjee,
experts are not surprised in the backdrop of a very high
expansion a year ago.
The Index of Industrial Production (IIP) had grown by 18
per cent during the same period last year, making it a
daunting challenge to maintain the expansion momentum this
fiscal due to the high base.
Industrial growth during April-December this fiscal stood
at 8.6 per cent, unchanged in comparison to the corresponding
period of the previous year, official data released here on
Friday showed.
The "disappointing" numbers came just days after the
Government's prediction of "encouraging" 8.6 per cent economic
growth this fiscal, against 8 per cent in 2009-10.
Meanwhile, the IIP for November has been revised upwards
to 3.6 per cent from the earlier estimate of 2.7 per cent.
The manufacturing segment, which has a weight of about 80
per cent on the IIP, managed to grow barely by one per cent in
December from a huge 19.6 per cent a year ago.
The capital goods sector, reflecting investment,
contracted to (-)13.7 per cent in December, 2010 versus
impressive 42.9 per cent expansion a year ago.
"Monthly and weekly numbers do not reflect correct
picture. Therefore you shall have to take the whole year into
account. Let us see how it reflects in the annual picture,"
Finance Minister Pranab Mukherjee said though, he termed the
December numbers as "very unfortunate and disappointing".
Similar views were expressed by Indian Planning
Commission Deputy Chairman Montek Singh Ahluwalia who said
month-on-month fluctuations in IIP should not be a cause of
concern as the economy, as a whole, was on a healthy growth
track.
"In order to achieve 8.5 GDP growth, 8 per cent
industrial growth for the whole year (2010-11) is enough,"
Ahluwalia said.
Rajrishi Singhal, Head (Policy & Research) of Dhanlaxmi
Bank said the 1.6 per cent growth should be seen in the
context of a very high base of 18 per cent expansion recorded
in December 2009. However, he was concerned over deceleration
in the capital goods sector.
"Decline in capital goods manufacturing shows that
investments is missing. There is need to step up investments
in the infrastructure sector for 8.5 per cent growth," Singhal
added.
Meanwhile, Mining growth fell to 3.8 per cent in
December, from 11.1 per cent in the same period of the
previous year.
Electricity generation grew by 6 per cent in the month,
compared to 5.4 per cent in December, 2009. (MORE) PTI JD
DBR


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