IIP growth rate may slip to about 10%: experts

After showing a robust growth of 13.8 per cent in July, the Index of Industrial Production (IIP) for August is likely to slip to around 10 per cent, say experts.

A day before the IIP for August is to be made public, senior economists today said that segments like capital goods -- which witnessed a production growth of 63 per cent in July against just 1.7 per cent a year ago -- will hopefully maintain the momentum.

"We expect August IIP numbers at 10.8 per cent. Auto and petroleum are the sectors that will lead the growth. Although core sector growth momentum has come down, we expect IIP to remain in double digits," Yes Bank Chief Economist Shubhada Rao told PTI.

She said that manufacturing will remain healthy, although overall output is slowing.

"Year-on-year growth will look weaker on base effect. Overall broader momentum, though relatively weaker, remains healthy," she said.

Standard & Chartered Bank Regional Head of Research Samiran Chakraborty said the growth momentum of July will be maintained but at a reduced level.

"Our forecast is a growth of 10-10.5 per cent. July saw an unusual jump in capital goods and if you look at the trends, capital goods and consumer goods have been drivers and it is unlikely to change in a single month," he said.

Besides, a good monsoon and increased rural spending may lead to growth in consumer non-durable segment also, he added.

Chakraborty, however, discounted the possibility that the RBI will step in with policy change even if the IIP growth is lower.

"Unless its a great drop in numbers, we don't see RBI going for a change," he said.

Ratings agency Crisil, on the other hand, said growth in industrial production may slip to single digit.

"We see it (IIP) falling to around 8.5 per cent. Growth in capital goods will not be as high as last month," Crisil Chief Economist D K Joshi told PTI.

He said that some other sectors like consumer durables and automobiles will do well.

"Everybody has been predicting that IIP growth in the second half of the fiscal will be weaker than the first," Joshi said.

Asked about the likely RBI reaction to a fall in the growth of manufacturing, he said: "RBI's policy action will hinge more on inflation, rather than on the IIP figures."