CMIE cuts industrial production growth forecast to 8.2%

The Centre for Monitoring Indian Economy (CMIE) has scaled down its forecast for the industrial production growth in 2011-12 to 8.2% from 8.7% earlier.

A lower-than-expected production growth witnessed by a few industries in the first 2-4 months of the year and delays in commissioning of plants by companies prompted it to revise the forecast downwards, CMIE said in its monthly review here.

Delays in commissioning of power projects have caused a downward revision in the forecast for the growth in electricity generation in FY12 to 9% from 10.1% earlier, it said.

CMIE revised its forecast for growth in steel production in FY12 from 12% to 9.5% due to a lower-than-expected growth in steel consumption in the first three months, and a shortfall of iron ore likely to be faced by the steel manufacturing units located in Karnataka, following the suspension of mining from Bellary ordered by the Supreme Court.

"Postponing of project commissioning by HPCL-Mittal Energy, Essar Oil and MRPL and a lower than expected growth in the June, 2011 quarter prompted us to bring down our forecast for growth in petroleum throughput in FY12 from 9.3% to 7.7%.

Consequently, our forecast for diesel, petrol and other petroleum products has been revised downwards," CMIE said.

CMIE has also revised its forecast for natural gas production in FY12 downwards due to the fall witnessed in the last seven months ended June, 2011.

"The growth in production of passenger cars and MUVs during the June 2011 quarter turned out to be lower than our expectations. The early numbers released by leading companies in the car industry hint at an 11% fall in passenger car sales in July, 2011.

A steady hike in interest rates and an increase in car and fuel prices are expected to push up the cost of car ownership. This is likely to hurt the consumer sentiment and restrict the growth in car sales and consequently production.

Hence, we have scaled down our forecast for the growth in motor vehicles and trailers production in FY 12 to 12% from 13.2% earlier, CMIE said.

CMIE has also revised its forecast for growth in copper production in FY12 to 4.4% from 6.7% earlier. It has also scaled down its forecast for edible oils production in FY12 because of the downward revision in estimates of kharif 2011 oilseeds crop.