Date:11/10/2008 URL: http://www.thehindu.com/2008/10/11/stories/2008101155421700.htm

Business

Industrial growth slumps to 1.3%

Special Correspondent

FM doubts over reliability of IIP figures

NEW DELHI: Giving clear signals of a slowdown worsening into a phase of recession, India’s industrial growth plummeted to a dismal 1.3 per cent in August from a robust 10.9 per cent in the same month in 2007, mainly on account of a poor show by the manufacturing sector.

The data on the Index of Industrial Production (IIP) released the Central Statistical Organisation (CSO) here on Friday revealed that the manufacturing sector crawled up by a mere 1.1 per cent during the month as compared to the 10.7 per cent growth notched up in August last year. Evidently, the ongoing global financial turmoil leading to a liquidity crunch coupled with the monetary tightening measures put in place during the year to control inflation has had its toll on the country’s industrial production growth.

In his comments on the industrial production data, Finance Minister P. Chidambaram, however, expressed doubts over the reliability on IIP numbers.

Noting that he had conveyed his concerns to the Ministry of Industry in this regard a couple of months ago, he said: “The IIP numbers are not very satisfactory and, at the same time, they are not very reliable… I think the IIP number has to be taken as just one input.”

For the entire five-month period (April-August) this fiscal, the overall industrial growth was pegged at 4.9 per cent, way below the 10 per cent growth achieved during the same period of 2007-08. Not that the other sectors of the industry fared any better during August 2008.