Capital goods and intermediate
By Dr.M.S.Kapadia
Economic Research India Ltd.
Industrial production witnessed a sharp drop in the growth rate from 6.7 per cent in 1999-00 to 5 per cent in the following year and a 2.8 per cent in 2001-02. The present study endeavours to see what caused this fall in the growth rate in terms of the contribution of different sub-groups in the use-based classification of the index of industrial production (IIP).
Consumer goods, which have 29 per cent weight in the IIP, emerged as the main driving force behind the growth in IIP during 2001-02. Its contribution shot up from 16 per cent in 1998-99 to 44 per cent in 2000-01 and 64 per cent in 2001-02. Its growth rates also shot up from 2.2 per cent in 1998-99 to 8 per cent in 2000-01, though the subsequent year saw a decline in the growth to 6 per cent. Relatively steady performance of consumer goods sector during 1999-00 to 2001-02 has lent some basic support to the bottom-line in the growth rates of IIP.
Consumer durables and non-durables both contributed to the rise in the share of consumer goods to IIP growth. Consumer durables include two wheelers, cars, tyres and tubes, household electrical/electronic and other equipment, etc, while non-durable consumer goods include broadly garments, food items and medicines.
The stellar performance of consumer goods was matched to some extent by basic goods production whose share in IIP growth increased from 14 per cent to 40 per cent during this period. Its growth rate increased from 1.6 per cent in 1998-99 to 5.5 per cent in 1999-00, but declined to 2.8 per cent in 2001-02. Basic goods include basic metals and alloys, industrial chemicals, coal, electricity, etc.
Capital goods performed worst. Its contribution to IIP growth dropped sharply from a high of 30 per cent in 1998-99 to 3 per cent in 2000-01 and a negative 15 per cent in 2001-02. Capital goods which include electrical and non-electrical industrial machinery and machine tools ship building and repairs and commercial vehicles, have 9 per cent weight in the IIP.
Intermediate goods sub-group, which saw the growth rate plummet from a 8.8 per cent in 1999-00 to 1.6 per cent by 2001-02, saw its contribution drop steeply from a high of 40 per cent in 1998-99 to only 11 per cent in 2001-02. The intermediate goods broadly include petrol and diesel oil, yarns, paints, pesticides, cement products, paper and paperboard, ceramic tiles, auto parts, etc.
|
|
Weight
|
Contribution
to IIP Growth (per cent)
|
|
|
in IIP
|
1994-95
|
1995-96
|
1996-97
|
1997-98
|
1998-99
|
1999-2000
|
2000-01
|
2001-02
|
|
Basic goods
|
36
|
37
|
30
|
17
|
37
|
14
|
30
|
28
|
40
|
|
Capital goods
|
9
|
10
|
4
|
18
|
8
|
30
|
10
|
3
|
-15
|
|
Intermediate goods
|
26
|
15
|
39
|
35
|
32
|
40
|
35
|
25
|
11
|
|
Consumer goods
|
29
|
38
|
28
|
29
|
23
|
16
|
25
|
44
|
64
|
|
Durables
|
5
|
9
|
10
|
4
|
6
|
8
|
13
|
15
|
28
|
|
Non-durables
|
23
|
29
|
18
|
25
|
17
|
8
|
12
|
29
|
35
|
|
YoY rise in IIP
|
|
9.1
|
13
|
6.1
|
6.7
|
4.1
|
6.7
|
5
|
2.8
|
Email:
mskapadia@projectstoday.com
