IIP recovery gathers steam in February

Factory output index was up by 5 per cent in February, against 3 per cent average increase in the preceding two months. Indicating that industrial production is fast finding its breadth, the output index has remained in the positive zone in past four months, with the mean growth over the period working out to 4 per cent, twice the rate in the previous seven months. Manufacturing expanded 5.2 per cent, electricity 5.9 per cent and mining 2.5 per cent (ending declines of earlier two months). Importantly, the consolidated index numbers, particularly for manufacturing sector, have seen upward revisions in the months till January. In manufacturing, seven out of 22 major industries (at two-digit NIC levels) showed declines during the month, whereas the other 15 were in positive growth territory. In use-based classification, basic goods, capital goods, intermediate goods and consumer non-durables increased annually, whereas the rate of decline in consumer durables got smaller.

Taking the cumulative data for April-February 2014-15 period, improvement in industrial, though a little subdued, is apparent. Thus, the growth rate in IIP worked out to 2.8 per cent, against stagnation in the corresponding period in the last fiscal. Manufacturing expanded 2.2 per cent (decline of 0.7 per cent), mining 1.5 per cent (decline of 1.2 per cent) and electricity generation 9.1 per cent (6.2 per cent). In mining, coal production increased 8.5 per cent (1.4 per cent); crude oil and natural gas continued to sink.

In manufacturing, six out of 22 major industries (at two-digit NIC levels) declined y-o-y during the first 11 months of the ongoing fiscal. The steepest decline of 54 per cent was recorded in radio, TV and communication equipment. Electrical machinery recorded 21 per cent increase, machinery and equipment 3 per cent, basic metals 13 per cent, and other non-metallic mineral products 4 per cent. Transport equipment increased 6 per cent and passenger cars 2 per cent. Refinery production increased 0.5 per cent during April-February 2014-15. Wearing apparel index increased 5 per cent on the back of 62 per cent increase in February and 15 per cent average in the preceding three months. The production index for wearing apparel had shown decline in H1 of the year.

In use-based classification, capital goods that cater to project investment increased 6 per cent (decline of 2.6 per cent). Though lumpy, the index has remained anchored in positive zone in the last four months. Among the other material inputs in project execution, cement production increased 6.7 per cent, twice the rate in the similar period in 2013-14, whereas alloy-non-alloy steel production retarded from 11.4 per cent to 1.1 per cent. Basic goods index increased 7.4 per cent and intermediate goods 1.8 per cent (3.3 per cent). Causing concern on possible weakening consumer demand, consumer non-durables slowed to 2.8 per cent (4.8 per cent), even as February recorded the fiscal’s first double-digit increase. Consumer durables, which include scooters, cars, gems and jewellery etc., sank deeper in red, partly due to heavy imports of consumer electronics.