Analysts who were stirred by 7.3 per cent sharp rise, a 30-month high in output index of key infrastructure industries that make up nearly two-fifth of broader industry, were disappointed by the slowdown in aggregate IIP to 3.4 per cent in June, from 5 per cent in the previous month. The main culprit for the decline in the rate was heavyweight manufacturing sector which grew only 1.8 per cent during the month, reversing the improvement from 2.5 per cent in April to twice this rate in the following month.
Mining index bettered the May feat of 2.9 per cent with 4.3 per cent rise whereas electricity generation shot up 15.7 per cent, against 6.7 per cent in the preceding month. Coal production kept improving, increasing 8.8 per cent in June, against 5.5 per cent in the previous month and 3.3 per cent two months ago. However, petroleum crude and natural gas remained listless. In electricity, thermal power contributed most to the increase.
In manufacturing, 15 out of 22 industries showed positive growth whereas seven others showed y-o-y decline. Electrical machinery and apparatus nec shot up 69.2 per cent during the month and 56.6 per cent during April-June. Other non-metallic mineral products increased 9.8 per cent and in this cement 13.6 per cent; their cumulative growth rates worked out to 7.6 per cent and 9.5 per cent, respectively. Basic metals production increased 8 per cent during June and 8.4 per cent during Q1; in this alloy, non-alloy steel production rose 4.2 per cent in June and 1.6 per cent during Q1. Motor vehicles etc. increased 7.3 per cent in June, ending around nine months of y-o-y drops.
Other transport vehicles index increased 7.7 per cent in June and 9.4 per cent over April-June. Radio, TV and communication equipment and apparatus showed 62.9 per cent decline in June and 47.3 per cent in Q1. Office, accounting and computing machinery declined 60 per cent (41 per cent cumulatively). Petroleum refinery output declined 1.3 per cent cumulatively.
Capital goods fare much better
In use-based classification, capital goods index shot up 23 per cent in June, which is 36 months high rate. This lifted the cumulative increase to 14 per cent, a complete turnaround from 3.7 per cent decline in Q1 of 2013-14 and y-o-y erosion in the preceding three fiscals. Though volatile because of lumpy nature, capital goods production has remained in the positive zone in the first three months of the ongoing fiscal. Capital goods include a wide range of industrial machinery, commercial vehicles, three-wheelers etc.
Indicating a somewhat halting recovery in project investment, cement and steel production has also remained in the positive zone in Q1. Even as investment seems to be slightly improving, consumer goods went deeper into red. Whereas consumer non-durables stagnated at year-ago level, consumer durables that include passenger cars, two-wheelers, gems and jewellery etc. declined over the quarter. Basic goods and intermediate goods improved upon their year-ago feat.