Three-month long rot halts in January

The factory output, as measured by the Index of Industrial Production, stagnated in January 2014, after consistent decline in the previous three months. The puny improvement in the index during the month was due to a lower y-o-y drop in heavyweight manufacturing index; mining maintained last month’s feeble pace and electricity slowed a bit.

Cumulatively, the aggregate IIP stagnated as in the first 10 months of the preceding year, with only electricity remaining in the positive zone. In fact, reflecting extremely fragile nature, manufacturing index performed very weakly, relapsing into decline recurrently, since April 2012 (barring a 9.9 per cent patchy rise in October 2012, which too came after an 11 per cent increase back in June 2011). Cumulatively, manufacturing index declined 0.4 per cent, over a meek rise in the same period of 2012-13. The performance of mining was even paler, where sprinkled with decline, the double-digit increase occurred last in March 2010. The index declined in the first 10 months of the ongoing fiscal, as in the corresponding period a year ago. Electricity grew strongly at 5.7 per cent during April-January 2013-14, speeding from 4.7 per cent in the same period a year ago.

In manufacturing, 10 out of 22 industries were in red during April-January 2013-14, which included basic metals; fabricated metal products; machinery and equipment; office and accounting machinery; radio and TV; medical equipment; motor vehicles and furniture, gem and jewellery etc., though electrical machinery and equipment (23 per cent); commercial vehicles (5.9 per cent); and other non-metallic mineral products (1.1 per cent) remained in the positive territory. Wearing apparel (28 per cent) on the back of decent export growth and chemicals and chemical production (10 per cent) were among the other star performers in the decaying manufacturing.

Petroleum refinery products (1.4 per cent), fertilisers (2.5 per cent), cement (3.4 per cent), and alloy and non-alloy steel (4.1 per cent) were among the core manufacturing industries recording relatively good production. In mining, coal production showed 1 per cent (6.5 per cent) increase, whereas petroleum crude and natural gas remained in the negative zone.

Some of the important products showing high positive growth during January include rubber insulated cables (56.6 per cent), air-conditioners (room) (32.5 per cent), shipbuilding and repairs (30.2 per cent), steel structures (26.5 per cent), scooters and mopeds (23.8 per cent), vitamins (22.7 per cent), stainless/alloy steel (21.3 per cent) and antibiotics and its preparations (21.2 per cent).

The products showing negative growth during the month include boilers [(-) 50.4 per cent], HR sheets [(-) 48.5 per cent], earthmoving machinery [(-) 45.2 per cent], aluminium conductors [(-) 43.2 per cent], grinding wheels [(-) 38.9 per cent], carbon steel [(-) 37.5 per cent], telephone instruments (including mobile phones and accessories) [(-) 30.7 per cent], generators and alternators [(-) 26.4 per cent], PVC pipes and tubes [(-) 25.7 per cent], polyester chips [(-) 24.4 per cent], commercial vehicles [(-) 22.6 per cent] and aluminium wires and extrusions [(-) 21.5 per cent].

Among the use-based classification, capital goods index was in the negative zone in eight out of the 10 months, though because of a 16 per cent spurt in July, the cumulative decline over April-January was contained at 0.8 per cent, much smaller than 9.4 per cent in the corresponding period of fiscal 2012-13. The production index of consumer durables, somewhat akin to capital goods, has kept eroding since December 2012; cumulative decline during the first 10 months of the current fiscal was placed at 12.5 per cent. Consumer non-durables increased 5.6 per cent, basic goods index 1.3 per cent and intermediate goods index 3 per cent.

Lack of further details which were earlier available in data on DIPP related 268 industries cramp our efforts to delve further into causal factors behind the industrial performance.