IIP contracts by 0.1% in Nov, may prompt RBI to cut rates

 Dashing hopes of a rebound, the industrial output contracted to a four-month low of 0.1 per cent in November due to poor performance of manufacturing and mining sectors and decline in production of capital goods.

The industrial output, as measured by the Index of Industrial Production (IIP) dipped from a robust 8.3 per cent in October. The decline may prompt the Reserve Bank to consider rate cut in its quarterly review on January 29 to boost growth.

The industrial output had grown by 6 per cent in November, 2011. Meanwhile, in July, 2012 it showed a contraction of 0.1 per cent.

Factory output growth was 1 per cent in April-November period this fiscal, down from 3.8 per cent in the same period in 2011-12, according to official data released here today.

Meanwhile, the growth in the industrial production during October last year was revised upward to 8.3 per cent, from earlier provisional estimates of 8.2 per cent released last month -- highest in previous 16 month.

The manufacturing sector, which constitutes over 75 per cent of the index, grew by meagre 0.3 per cent in November in 2012, as against a 6.6 per cent in 2011.

The output of the key sector remained low at one per cent in April-November last year as against 4.2 per cent growth in the same period in 2011.

The mining output in November contracted by 5.5 per cent compared to a decline in production by 3.5 per cent in same month in 2011. The sector's production in April-November also declined by 1.5 per cent, against a contraction of 2.4 per cent in the year-ago period.

Capital goods output declined by 7.7 per cent in November, as against a contraction of 4.7 per cent in same month in 2011.

The output of capital goods also contracted in the April-November period by 11.1 per cent, as against a dip in production by 0.1 per cent in the 2011-12 period.

Power generation grew by 2.4 per cent in November, as against 14.6 per cent in same month in 2011. The electricity generation in the April-November period this fiscal is 4.4 per cent, as against 9.5 per cent in a year-ago period.

Consumer goods output growth was 1 per cent in November as against 12.8 per cent. In the April-November period of this fiscal, the growth in consumer goods was 3.8 per cent as compared to 5 per cent in the same period of 2011-12.

The growth in output of consumer durables is 1.9 per cent in November, as compared to double digit growth of 10.4 per cent in the same month in 2011. The growth in the output of these goods remained flat at 5.2 per cent in April-November this fiscal.

The consumer non-durables output growth was 0.3 per cent in November, as against a 15 per cent in the year-ago period. This segment grew by 2.5 per cent in the eight month period of this fiscal, as against 4.9 per cent in the same period of 2011-12.

The basic goods production growth was 1.7 per cent in November, compared to 6.5 per cent the year-ago period.

During the April-November period, this segment recorded a growth of 2.8 per cent, compared to 6.3 per cent in the first eight months of last fiscal.

The intermediate goods output declined by 1.1 per cent in November as compared to a growth of 1.3 per cent in the same month in 2011. During the April-November period this fiscal, growth in the output of these goods was 1.8 per cent compared to a contraction of 0.6 per cent in the eight month period a year ago.

In terms of industries, 13 out of 22 groups in the manufacturing sector have shown negative growth in November, 2012 as compared to the same month in 2011.

The industry group ‘Publishing, printing and reproduction of recorded media’ has shown the highest contraction of 22.1 per cent, followed by 21.8 per cent in ‘Office, accounting and computing machinery’ and 18.9 per cent in ‘Wood and products of wood & cork except furniture.

On the other hand, the industry group ‘Electrical machinery and apparatus’ has shown a positive growth of 25.1 per cent, followed by 15.7 per cent in ‘Luggage, handbags, saddlery, harness and footwear; tanning and dressing of leather products’ and 15.3 per cent in ‘Radio, TV and communication equipment and apparatus’.