Factory output rises 3.7% in Jan

The industrial growth, measured in terms of index of industrial production (IIP), was 16.8 per cent in January last year, making it a challenge to maintain the expansion momentum during the same period of this fiscal due to the high base.

Meanwhile, the IIP for December 2010, has been revised upwards to 2.5 per cent, from 1.6 per cent. During April-January period of current fiscal, Industrial growth slowed to 8.5 per cent, from 9.5 per cent in the previous financial year.

“IIP has come down and average is now 8.3 per cent in 10 months. It is better. But I am still not happy,” Finance Minister Pranab Mukherjee told reporters here.

Echoing similar views,  Planning Commission Deputy Chairman Montek Singh Ahluwalia said, “IIP growth rate for January is little bit higher (than December), but it is still not as good as it should be. Overall slowdown for the last 2-3 months is a matter of concern.”

Expressing concerns over slowdown in industrial growth, he said strong investment performance and improvement in infrastructure are key to recovery. “Slowing down (of IIP) for last two three months is a matter of concern. We should watch it,” Planning Commission Deputy Chairman Montek Singh Ahluwalia told reporters here.
“I believe that the key to recovery is going to be strong investment performance in coming year and also good infrastructure performance.”

Expressing dissatisfaction over the industrial output growth for the month of January, he said, “The IIP growth rate for January is little bit high higher (than December), but it is not as good as it should be.”

Temporary trend

Ahluwalia said, “I would not regard the slowing down of industrial production as permanent feature but it does reflect the fact that at the moment for past two or three month, the pace of industrial production is not what we wanted to be. But I hope it will improve.”

“The manufacturing output is still sluggish and the industrial growth is yet to reflect continuous momentum — another rate hike by RBI may dampen future growth prospects more than its impact on moderating inflation,” Deloitte (India) Principal Economist Shanto Ghosh said. Despite a better show over December, factory output was low in January as capital goods contracted by 18.6 per cent. The sector had expanded by a robust growth of 57.9 per cent in January, 2010.

Besides, manufacturing sector growth plummeted to 3.3 per cent from 17.9 per cent a year ago. Also mining growth was a dismal 1.6 per cent in January, against 15.3 per cent YoY. On the whole, 14 out of 17 industry groups achieved positive growth in the first month of 2011.