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Industrial growth nosedives to six-year low at 3%

(The Hindu Business Line 13th May 2008)

Lacklustre performance by the manufacturing sector pulled down the growth in Index for Industrial Production (IIP) to a six-year low of three per cent in March 2008 as against 14.8 per cent in March 2007.
However, for fiscal 2007-08, the IIP registered a modest growth rate of 8.1 per cent as against 11.6 per cent in fiscal 2006-07.
Growth in the manufacturing sector, which carries 79.3 per cent weight in the IIP, dipped to a meagre 2.9 per cent in March 2008 as compared with 16 per cent in March last year, while for the full year the sector grew by 8.6 per cent as against 12.5 per cent in 2008-07.
The growth rates have fallen also for electricity (3.7 per cent in March 2008 as against 7.9 per cent in March 2007) and mining (3.8 per cent versus 8 per cent). However, for fiscal 2007-08, the mining sector has been able to post a growth of five per cent, only marginally lower compared with 5.4 per cent in 2006-07.Capital goods shine
The only silver lining in the overall dull scenario is the 8.6 per cent growth in capital goods production in March 2008. Although this is lower than the 18.1 per cent growth registered in the same month last year, it is still indicative of continuing investment activity taking place in the economy. The recently ended fiscal has also seen an overall growth rate of 16.5 per cent in capital goods against the 18.2 per cent during 2006-07.Consumer goods slump
On the other hand, the consumer goods sectors are clearly in a beleaguered state. High interest rates have led to growth rates plummeting from 3.8 per cent to -2.1 per cent for consumer durables and from 20.2 per cent to 0.6 per cent in the case of consumer non-durables in March 2008. During 2007-08 as a whole, the growth rate for consumer durables stood at -1 per cent (against 9.2 per cent in 2006-07) while amounting to 8.1 per cent for consumer non-durables (10.4 per cent). Sharp dip
The basic and intermediate goods sectors have also recorded sharp deceleration during March, growing by 3.1 per cent and 3.5 per cent respectively as against their corresponding March 2007 levels of 11.9 per cent and 15.3 per cent respectively.
During 2007-08, the growth rate for basic goods was estimated at 6.9 per cent (10.3 per cent in 2006-07) and 8.7 per cent (12 per cent) in the case of intermediate goods.
Among individual industries, the ones that have taken a real beating during March are metal products and parts (-25.8 per cent growth), wood and wood products (-5.8 per cent), textile products (-5.5 per cent), cotton textiles (-1.8 per cent) and transport equipment and parts (-0.1 per cent).
The individual sectors that fared well include beverages, tobacco and related products (11 per cent), wool, silk and man-made fibres (9.7 per cent), jute and other vegetable fibres (62.7 per cent), leather and fur products (12.7 per cent) and other manufacturing industries (24.9 per cent).

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