Industrial growth falls to 3.3 per cent in July

Growth in the factory output, as measured in terms of the Index of Industrial Production (LIP), had stood at 9.9 per cent in July last year.

During the April-July period of this fiscal, IIP growth stood at 5.8 per cent, as against 9.7 per cent in the corresponding four-month period last year.

Output of the manufacturing sector, which constitutes over 75 per cent of the index, grew by only 2.3 per cent in July compared to 10.8 per cent expansion in the same month last year, according the official data released today.

Production of capital goods declined by 15.2 per cent in July, in comparison to a growth of 40.3 per cent in the same month of 2010.

The growth in mining production was 2.8 per cent in the month, down from 8.7 per cent in the same month last year.

Production of intermediate goods fell by 1.1 per cent during the month under review against a growth of 8.5 per cent in July 2010.

Consumer durables grew by 8.6 per cent in July as compared to a growth of 14.8 per cent in the corresponding month of last year.

However, electricity production improved witnessing a growth of 13.1 per cent in July this year as against a growth of 3.7 per cent in July, 2010.

PM panel to revisit target
Industrial growth projections for the current fiscal will have to be revisited in the wake of “disappointing” pace of expansion in the factory output, which plunged in July to 3.3 per cent, Chairman of Prime Minister’s Economic Advisory Council C Rangarajan said.

“As regards the estimate of industrial production for the year as a whole, we will have to revisit the area after one or two months,” Rangarajan said, after release of the Index of Industrial Production (IIP).

“It is a disappointing number. One had expected that industrial production will be slightly higher than this,” Rangarajan said. In its Economic Outlook, the panel had projected industry to grow by 7.1 per cent in the current fiscal. The government, in February had pegged it at 8.6 per cent. The IIP had grown by 7.8 per cent in 2010-11.

Rangarajan, however, hoped that the industry would put up a better show in the second half of the year. “At the present moment perhaps the numbers are not encouraging... but if the industrial production does better in the second half, then the overall growth rate may be higher. I will say that we will have to revisit the area after one or two months,” he said.