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Industrial growth rate looks down

NEW DELHI: India’s overall industrial growth rate rose to 7 per cent in April 2008 from the previous month’s 3.9 per cent, although the figure was far from robust as compared to the 11.3 per cent growth posted in April 2007. A slowdown in the manufacturing sector owing to high interest rates and rising input costs is attributed to the year-on-year fall in the first month of the fiscal year.

The figures for April, however, acted as a positive trigger for stock markets on Thursday, which were in gloom earlier in the day. The benchmark Sensex, which had shed over 400 points in morning trade, recovered to close higher by over 60 points at 15,250 after the better-than-expected 7 per cent growth seemingly boosted investor confidence.

According to Index of Industrial Production (IIP) data released by the Central Statistical Organisation (CSO) here on Thursday, the slump in relative overall growth in April was primarily on account of dismal shows by two major sectors, manufacturing and electricity generation. During the month, the growth rate in manufacturing slipped to 7.5 per cent from 12.4 per cent in April 2007. And electricity generation witnessed a much sharper fall from 8.7 per cent to 1.4 per cent. The only exception was the mining sector, which recorded a robust growth of 8.6 per cent as compared to 2.6 per cent in April last.

Despite the year-on-year decline, the IIP data revealed that the overall performance in April was still much better as compared to the 3.9 per cent growth rate notched up in March 2008, the last month of fiscal 2007-08. Thus, even though a slowdown in the economy is discernible, the improvement in industrial growth rate within a month provides some assurance that the downturn may not be as severe as anticipated earlier.

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