Thanks to a record 12.9 per cent increase in power generation, the aggregate factory output index (IIP) increased by 2 per cent in September, partially recovering from the drop to 0.4 per cent in August (from 2.8 per cent rise in July). The first three months of the ongoing fiscal had ended with y-o-y decline in output.

Reflecting the impact of an excellent southwest monsoon and improved thermal power, power generation has been increasing robustly in the current fiscal: it increased by 5.2 per cent in July, 7.2 per cent in August and now a 32-month high of 12.9 per cent in September that pushed up the cumulative growth during H1 to 5.9 per cent (4.6 per cent a year ago). Thermal power was up by a record 16.5 per cent in September and 4 per cent in H1; hydropower was up 3.7 per cent in September and 17 per cent cumulatively, even as nuclear power, a minor component in power infrastructure, showed decline in September and H1. Hydropower import from Bhutan increased by 10 per cent during H1.

Manufacturing, the main component of industry, has continued to be extremely weak, crawling at 0.6 per cent in September, against a decline in the preceding month. Bogged down by decline in three out of six months, manufacturing has increased anemically during H1, over a similar decline in the corresponding period of 2012-13. Obviously, a fragile manufacturing, notwithstanding strong power generation, points to deeper problems, largely on demand side, impeding the sector.

INDEX OF INDUSTRIAL PRODUCTION (Y-O-Y % INCREASE)
 
September
H1
 
2012
2013
2012-13
2013-14
Mining
2.2
3.3
-1.1
-2.5
Manufacturing
-1.6
0.6
-0.3
0.1
Electricity
3.9
12.9
4.6
5.9
Overall IIP
-0.7
2
0.1
0.4
Use-based classification
Basic goods
2.7
5.4
2.7
1.2
Capital goods
-13.3
-6.8
-14.2
-0.7
Intermediate goods
1.7
4.1
1.1
2.6
Consumer goods
0
0.6
2.7
-1.3
Consumer durables
-1.5
-10.8
4
-10.9
Consumer non-durables
1.4
11.3
1.6
7.3

Mining, contributing fuel for power generation and several minerals for industrial production, broke through the decline of April-August by expanding at 3.3 per cent during September, even as cumulatively it has remained in the negative zone. Coal production was up 12.5 per cent in September and 2.3 per cent during H1. Petroleum crude oil managed to progress to the positive zone, even as cumulatively it has remained in the negative zone. Natural gas stayed put in the negative zone.

A half of 22 industries at two-digit NIC levels showed decline in production during H1. Still, electrical machinery and apparatus n.e.c. posted 11 per cent increase in September and 26 per cent over H1.The feat has, however, come after a similar decline in H1 of 2012-13. Wearing apparel and dressing material posted a robust 39 per cent cumulative growth, coke and refined petroleum products and nuclear fuel and chemicals and chemical products 9 per cent each. Radio, TV and communication equipment and apparatus has shown a decline of 22 per cent; motor vehicles, trailers and semi-trailers 6 per cent; office, accounting and computing machinery 15 per cent; and machinery and equipment n.e.c.11 per cent drop in output index.

Going by use-based classification, capital goods index declined by 6.8 per cent in September and 0.7 per cent over H1 over 14 per cent drop in H1 a year ago. In fact, nine out of the past 12 months have ended with y-o-y drops in capital goods index. Cement and alloy- and non-alloy steel production increased by 4.5 per cent. Consumer durables, somewhat akin to capital goods, declined for the ninth consecutive month with the cumulative decline over April-September placed at 11 per cent. Basic goods IIP was up one per cent, that of intermediate goods 3 per cent and consumer non-durable 7 per cent during H1.


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