Factory output dips sharply in March

The contraction has been mainly on account of a 3.3 per cent fall in the manufacturing sector’s output, which accounts for nearly 80 per cent in the index of industrial production (IIP). The sector grew by 5.7 per cent in March 2008.
During 2008-09, which saw the impact of unprecedented global financial turbulence, the industrial growth rate decelerated sharply to 2.4 per cent as against a high of 8.5 per cent in the previous financial year, according to the IIP released by the government on Tuesday.
Commenting on the dismal growth figures, Prime Minister’s Economic Advisory Council (PMEAC) Chairman  Suresh Tendulkar, said: “recovery is bound to be slow ... but it (economy) is picking. I expect that impact of stimulus measures will come.”
Apart from manufacturing, mining performed poorly with the growth rate slipping to 0.4 per cent during March compared to 4.9 per cent in the same month a year ago. For 2008-09, growth in the mining sector slipped more than half to 2.3 per cent compared to 5.1 per cent in the previous fiscal.
Although electricity generation recorded a growth rate of 6.3 per cent in March, up from 3.7 per cent in the corresponding period a year ago, the output during the year as a whole decelerated to 2.8 per cent from 6.4 per cent in 2007-08.
As regards use-based classification of goods, capital goods sector saw worst performance with output during March contracting 8.2 per cent as compared to very high growth of 20 per cent in the corresponding month a year ago.
During the year as whole, the output of capital goods decelerated to 7 per cent from 18 per cent a year ago.
According to Icrier Director Rajiv Kumar, “slowdown in capital goods is not a good sign and shows that investment activities have slowed down, which is not good for the economy.”
Intermediate goods production declined by 4.4 per cent in March against a rise of 4.9 per cent during the same month a year ago.