The numbers for March is lowest since the 2.4 per cent recorded in February 2002.
Owing to the slow growth in March, the industrial output, measured by the Index of Industrial Production (IIP), slipped to 8.1 per cent for 2007-08 from 11.6 per cent a year ago. However, industrial growth figures for the entire fiscal was not as dismal as that of March, giving some solace to the government.
Manufacturing output, which carries almost 80 per cent weight in IIP, rose by a poor 2.9 per cent in March against 16 per cent a year ago, as consumer durables output fell. The slowdown in the industry could have a marginal effect on the overall growth of the economy, which is projected to grow by 8.7 per cent. This coupled with a 7.61 per cent inflation in the early part of current fiscal could impact demand, analysts say.
Inflation rate
The industrial slowdown will also increase the dilemma of RBI in choosing between anti-inflationary measures and growth-promotion steps. Any further tightening of money supply may retard the growth process, analysts warned.
Even as the government released the industrial growth figures for March, the rupee tumbled to over Rs 42 per dollar for the first time since April 2007. Mining sector growth rate also decelerated to 3.8 per cent, down from 8 per cent in the corresponding month in the previous fiscal.
Similarly, electricity sector’s output during the month slipped to 3.7 per cent as compared to 7.9 per cent in the corresponding month in 2006-07.
As per use-based classification, consumer durables sector showed a decline of 2.1 per cent from 3.8 per cent in March 2007, while output of consumer non-durables category registered a small growth of 0.6 per cent from 20.2 per cent.
The deceleration was also witnessed in other categories like capital goods (8.6 per cent against 18.1 per cent), basic goods (3.1 per cent against 11.9 per cent) and intermediate goods (3.5 per cent against 15.3 per cent).
The growth rates of manufacturing and electricity sectors during 2006-07 decelerated to 8.6 per cent and 6.4 per cent from 12.5 per cent and 7.2 per cent respectively as compared to the previous fiscal.
