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| IIP growth continues to be robust at 9.1% |
| BS Reporter / New Delhi Nov 13, 2009, 01:18 IST |
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Industrial output, as measured by the index of industrial production (IIP), grew by 9.12 per cent in September, up from 6 per cent in September 2008. It was mariginally lower than the 10.4 per cent in August this year.
Experts maintained that the growth momentum has been sustained primarily due to stimulus packages. Simultaneously, there is a debate on whether it is the time for the government and the Reserve Bank of India (RBI) to exit from easy fiscal and monetary policy, due to concerns on government fiscal health and rising inflation.
The growth in industrial output for August was revised upwards to 10.96 per cent.
“Low agricultural output has weighed on production, with the agricultural sector employing the vast majority of the rural workforce and influencing the broader economy. Fiscal stimulus, rebounding demand in urban centres and inventory restocking have helped support production, as has a recovery in external demand, led by emerging economies,” said Nikhilesh Bhattacharyya, associate economist with Moody’s economy.com.
Ficci President Harsh Pati Singhania also advocated continuing the stimulus measures for some more time. “If the policy framework is left untouched, we can expect this performance to continue in the months ahead,” he said.
However, despite the more-than-expected growth rate in the past three months, industry anticipates the stimulus to continue for some time. “I think the decision on the rollback will be taken at the time of next year’s Union Budget. The stimulus will continue for some time,” said Vinayak Chatterjee, chairman of infrastructure consultancy, Feedback Ventures.
Both Prime Minister Manmohan Singh and Finance Minister Pranab Mukherjee recently indicated that a rollback would happen only in the next financial year.
Economists expect the trend of growth to continue on a year-on-year basis, backed by consumer demand in urban centres. The purchasing manager’s index, which stood at 55 for September, also showed that credit conditions were easing. ” In coming months, industrial production is expected to improve as compared to the figures of the previoud year. With the number of domestic car sales hitting a record in October, consumer demand is improving. Investment spending and demand for capital goods is expected to rise in coming months,” Bhattacharyya added.
Within IIP, manufacturing grew by 9.3 per cent during September 2009, against 6.2 per cent during the same month last year. Mining and electricity also posted better growth rates on a year-on-year basis and are due to stand at 8.6 per cent and 7.9 per cent, respectively. The sectors had grown by 5.8 per cent and 4.4 per cent, respectively, in the month under consideration in 2008.
However, the growth in all three categories fell marginally on a month-on-month basis. Mining had grown by 10.97 per cent and manufacturing by 10.98 per cent in August. Electricity generation had also posted an impressive growth of 10.60 per cent in the previous month of August.
Production of consumer durables surged by 22.2 per cent and consumer goods by 8.2 per cent. Growth in production of consumer non-durables slowed down to 2.6 per cent from 4.8 per cent in the corresponding period in 2008.
Production of basic goods grew by 6.7 per cent, capital goods by 12.8 per cent and intermediate goods by 10.8 per cent.
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