Business

Industrial growth slumps to 7.1 p.c. in July

NEW DELHI: Industrial growth slumped to 7.1 per cent in July from 13.2 per cent in the same month of 2006, as the manufacturing sector, especially automobiles and household goods, witnessed a sharp slowdown in the wake of high interest rates that forced consumers to slash spending.

Significantly, the growth in the manufacturing sector, which in earlier months used to boost the overall industrial growth, plummeted to a low of 7.2 per cent during the month as compared to a robust 14.3 per cent posted in July last year.

According to quick estimates of the Index of Industrial Production (IIP) released by the Central Statistical Organisation (CSO) here on Wednesday, the other two sectors, mining and electricity, also witnessed a slowdown in growth. During the month, while the mining sector grew at a slower pace of 4.9 per cent, down from 5.1 per cent last year, the growth in electricity generation also decelerated to 7.5 per cent from 8.9 per cent clocked in the same month last year.

In particular, it was the slump in manufacturing such as automobiles and other consumer durables that had to bear the brunt of the tight monetary policy clamped by the Reserve Bank of India in the past few months so as to rein in inflation. While the resultant high interest rates have brought inflation under control, it has, in turn, led to a cut in consumption expenditure.

Accordingly, the consumer goods sector was also faced with a sharp slowdown this July as is evident from the mere 5.3 per cent growth as compared to 16.8 per cent in the same month last year. To cite an instance, the Society of Indian Automobile Manufacturers (SIAM) has reported a fall in total auto sales by 4.98 per cent during April-August this fiscal.

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