Factory output, as measured by the index of
industrial production, slowed to 11.5 per
cent in May, from 16.5 per cent in the previous
month. In fact, the pace was the slowest
over the past seven months. Although the expansion
still works out to double digits, the development
has caused some concern among analysts
who were expecting the growth rate to match the
performance of the earlier
months; because all these
months, including May, enjoyed
the benefit of low-base year
effects, which would dissipate in
coming months.
In another development,
against the subsequent upward
revisions noticed in 'Quick Estimates'
for some time in recent
past, the growth rates worked out
lower to 16.5 per cent (17.6 per
cent) under the first revision in
April, and to 16.3 per cent (16.7
per cent) in January and 14.8 per
cent (15.1 per cent) in February
under the second revision.
The decline in the growth rate
in electricity in May vis-à-vis
April was relatively modest, from 6.8 per cent to
6.4 per cent; in mining, it was steep from 11.7
per cent to 8.7 per cent; manufacturing slowed
the most with expansion rate dropping from
17.9 per cent to 12.3 per cent.
Index of Industrial Production (y-o-y % increase) |
|
May |
April-May |
| |
2009 |
2010 |
2009-10 |
2010-11 |
| Mining |
3.4 |
8.7 |
3.4 |
10.2 |
| Manufacturing |
1.8 |
12.3 |
1.1 |
15.1 |
| Electricity |
3 |
6.4 |
4.8 |
6.6 |
| Overall IIP |
2.1 |
11.5 |
1.6 |
14 |
| Use-based classification |
| Basic goods |
3.8 |
7.9 |
4.1 |
8.5 |
| Capital goods |
-3.6 |
34.3 |
-4.7 |
50.9 |
| Intermediate goods |
6.6 |
10.2 |
7.3 |
10.4 |
| Consumer goods |
-1.1 |
8.2 |
-2.9 |
10
|
| Consumer durables |
13.2 |
23.7 |
15.3 |
28.1 |
| Consumer non-durables |
-5.5 |
2.4 |
-8 |
3.5 |
Out of the 17 major industries, nine industries
slowed down in May while eight others saw
improved rates. Food products declined the most
from 24 per cent in April to one-fourth the rate in
May. Considering that the production index for
food products had declined in the preceding two
fiscals, it would appear that this industry, which
includes sugar, edible oil, milk powder etc., is
beset with some serious supply-side structural
problems.
Among other industries, the growth rate in electrical
and non-electrical machinery dropped from
55 per cent to less than half this level in May; transport
equipment and parts from 33 per cent to 25 per
cent; basic metal and alloy industries from 10.9 per
cent to 9.4 per cent; and basic chemicals and chemical
products from 8.9 per cent to 7.5 per cent.
However, non-metallic mineral products saw an
improved rate from 2.6 per cent to 5.5 per cent.
Though finished carbon steel fared better with 3.6
per cent (0.6 per cent), cement decelerated to 8.7
per cent (11.8 per cent) during April-May.
Although the growth rate in capital goods production
index for May worked out to half the 69 per
cent in the previous month, propped up by yearago
suboptimal feat, the sector, which makes project
investment happen, expanded 45 per cent on
an average over the past six months. The composite
production index for basic goods was up 8.5 per
cent (4.1 per cent) and that of intermediate goods
10.4 per cent (7.3 per cent) in April-May.
Consumer durables, which reflect the conspicuous
consumption by the country's elite class, burgeoned
28 per cent during April-May, over 26 per
cent in the preceding fiscal; consumer nondurables,
which reflect the basic necessities of the
aam aadmi, increased by 3.5 per cent, keeping the
static average rate of the past two fiscals.
The recovery phase, which has been helped by
the slump a year ago, so far seems to be over and
industrial progress in coming months, which has
to contend with relatively high increases
of last year, will decide how strong, or weak, is the
progress towards robust industrial performance
that had peaked to 11.5 per cent in 2006-07 in the
current millennium.