| Lower production of sugar, wheat hits IIP growth | |
| Niharika Chandola / New Delhi May 23, 2009, 1:14 IST | |
Lower production of wheat flour, sugar, milk products and tea in March pulled down the overall output of food products, which account for nearly one-tenth of the Index of Industrial Production (IIP). The key index contracted 2.3 per cent during the month under consideration, as against 5.5 per cent growth seen in the same month of the previous year.
Experts point that the 35 per cent dip in food product output during March was a key reason for the dip in IIP. Wheat flour, sugar, milk products and tea constitute nearly 6 per cent of the county’s industrial output.
“If food products had not registered such a sharp decline, the industrial production would have been close to zero or even touched positive figures,” said DK Joshi, principal economist, CRISIL, a credit rating agency.
India’s Chief Statistician Pronab Sen maintained that the latest IIP figures did not come as a surprise and pointed towards the dip in sugar production as one of the reasons. The commodity accounts for a little over 2 per cent of the total industrial production in the country. According to the agriculture ministry, sugarcane production is down by 17 per cent in the latest rabi season owing to lower acreage and yield.
The drop in sugarcane production forced mills to end their crushing season earlier this year. Most mills saw a crushing season of 90-100 days compared with the normal season of over 120 days.
Indian Sugar Mill Association (ISMA) Director General S L Jain pointed out that farmers preferred to sell sugarcane to the gur and khandsari units as they were paying higher prices for the crop.
Sugar output in the 2008-09 season (October-September) is down by over 45 per cent to 14.7 million tonnes.
“The production of whole wheat flour has declined due to the changing consumption pattern. With rising affluence, consumers are shifting to non-cereal products like fruits and meat products,” said Veena Sharma, Joint Secretary, Roller Flour Millers Association of India. Wheat flour has a weightage of over 2 per cent in the IIP.
Industry insiders point that the milk powder output, which constitutes a per cent of the IIP, was also down. “Due to the global recession, export markets for milk products are down. This led to lesser production,” said Sandeep Agarwal, director of Delhi-based SMC Foods.
“Due to less than expected rainfall, estates across the country also yielded lesser tea,” said Aditya Khaitan, Chairman, India Tea Association, explaining the fall in production of the commodity.
Significantly, Wholesale Price Index data show that food prices have been firming up. “There is no one-on-one correlation between food price rise and production. The IIP takes into account manufactured products like biscuits and chocolates as against rice and dal whose prices have increased,” said Indraneel Pan, economist with Kotak Mahindra Bank.
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