Industrial output up 2.5 pc in March

Driven by a robust growth in manufacturing and capital goods sectors, India’s industrial output for March grew 2.5 per cent, fastest since October last year. However, a steep decline in consumer durables indicated a slump in savings by the people due to the slow economic growth and high inflation.

Manufacturing sector, which constitutes over 75 per cent of the index, grew by 3.2 per cent in March as against a decline in output by 3.6 per cent in the corresponding month last year.

A strong growth of 6.9 per cent in capital goods, as against 20 per cent decline in the same month last year, surprised economists and market players as there was little evidence to show that the investment cycle was picking up. This was the second consecutive month when the capital goods sector grew. It had accelerated by 9 per cent in February.

Mining sector declined 2.9 per cent in March as against 1.1 per cent decline in the same month last year. Mining was severely hit by delays in land acquisition and environmental approvals.

Though the finance ministry cheered the revival of the industrial output growth after a gap of five months and hoped that the trend would continue, India Inc expressed concerns over the slowdown in economic activities and consumer demand which continued to constrain manufacturing and capital goods expansion.

“What is creating concern is the growth of the mining sector which continues to be in the
negative terrain. Similarly, the negative growth of consumer durables indicates subdued demand conditions reinforcing our view that the sector continues to be stymied by the high interest rates prevailing in the economy,” said CII director general Chandrajit Banerjee.

Prime Minister’s Economic Advisory Council chairman C Rangarajan said though the overall industrial production index was moving in a positive direction, the savings element in the economy was going down, which reflected in the declining numbers of consumer durable goods production.