Date:13/01/2009 URL: http://www.thehindu.com/2009/01/13/stories/2009011356181500.htm

Business

Industrial growth recovers

Special Correspondent

NEW DELHI: Industrial production recovered in November 2008 with a growth of 2.4 per cent after having slipped into negative territory for the first time in 15 years in October in the wake of the slowdown owing to the ongoing global financial crisis.

According to the official data on the Index of Industrial Production (IIP) released here on Monday, the production growth figures for October 2008 stood revised marginally upwards to (-) 0.3 per cent from the earlier provisional estimate of (-) 0.4 per cent.

Even as the IIP data may be interpreted as the worst being over on the industrial front, the production growth clocked in November last year is still way lower than the 4.9 per cent increase posted in the same month of 2007. However, the bounce-back itself is still an encouraging signal, especially when viewed in the context of the poor growth in infrastructure industries in November coupled with the dismal performance of the auto sector and exports during the month.

Above expectations

More significantly, the manufacturing sector, which has a weight of nearly 80 per cent in the IIP basket, grew at a slower pace of 2.4 per cent in November 2008 as compared to 4.7 per cent in the same month a year ago. Alongside, while electricity generation rose by 3.1 per cent as compared 5.8 per cent, mining output was up by a mere 0.5 per cent as against 6.3 per cent in November 2007.

Accordingly, for the first eight months of the current fiscal, the overall industrial production witnessed a growth of 3.9 per cent as compared to 9.2 per cent posted during April-November in the previous fiscal.

Commenting on the industrial growth figures, Prime Minister’s Economic Advisory Council Chairman Suresh Tendulkar said: “The numbers are above my expectations and in the coming days, I expect [them] to improve more…After the easing of monetary and fiscal policy, I expect urban consumers to spend more and industrial activities to improve.”

Since the post-November IIP data would factor in the stimulus packages announced in December 2008 and January this year, industrial production growth is expected to show some improvement from December onwards.