The aggregate factory output index (IIP) spurted 2.6 per cent July, against declines in the preceding two months and 1.5 per cent rise in April. Manufacturing was up 3 per cent, against declines in the preceding two months. Constituting a major possible green shoot, capital goods production, a part of manufacturing sector, soared 15.6 per cent, the best rate in 25 months period that was splashed with declines in 17-18 months. Electricity generation increased 5.2 per cent, after a zero per cent growth in June.

Mining, contributing fuel for power generation and several minerals for industrial production, however, continued to be a drag on industry; recording y-o-y decline for the tenth consecutive month. In mining, coal output increased anemically in July, after declines in the preceding two months, even as crude oil and natural gas kept eroding. Cumulatively, barring 3.9 per cent rise in power generation, mining dropped 4 per cent and manufacturing 0.2 per cent, which led to a nominal decline in aggregate IIP during April-July.

Index of Industrial Production (Y-o-Y % increase)
 
July
April-July
 
2012
2013
2012-13
2013-14
Mining
-3.5
-2.3
-2
-4
Mfg
0
3
-0.6
-0.2
Electricity
2.8
5.2
5.5
3.9
Overall IIP
-0.1
2.6
-0.1
-0.2
Use-based classification
Basic goods
1.0
1.7
2.7
0.1
Capital goods
-5.8
15.6
-16.8
1.8
Intermediate goods
0.1
2.4
0.6
1.8
Consumer goods
0.7
-0.9
3.1
-2.0
Consumer durables
0.8
-9.3
6.1
-12.0
Consumer non-durables
0.6
6.8
0.6
6.7

Half of the 22 industries at 2-digit NIC levels showed increase in production during the month, and 10 over April-July. Electrical machinery & apparatus n.e.c. posted 83.6 per cent increase during the month and 30 per cent during the first four months of the ongoing fiscal. Wearing apparel, dressing material also posted a robust 45 per cent cumulative rise. Rubber insulated cable has recorded high growth rates consistently in past four months. However, radio, TV and other communication equipment and office, accounting, computing machinery posted 21 per cent cumulative decline, machinery & equipment n.e.c. 10 per cent and furniture, manufacturing, n.e.c. 15 per cent drop in output during April-July.

Going by use-based classification, capital goods index, which surrogates projects investment, bucked eroding trend of past several months (barring some increases) with 15.6 per cent rise during July, which also lifted the industry to the growth phase over April-July. Because of lumpiness in output data, one would need to wait for some more months to confirm the firmness of the uptrend in capital goods output. Consumer durables, somewhat akin to capital gods, declined for the eighth consecutive month with the cumulative decline over April-July placed at 12 per cent. Basic goods IIP stagnated at year ago level, intermediate goods rose 2 per cent and consumer non-durable was up 6.7 per cent during April-July.


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