Moody's Analytics projects uptick in industrial growth to 4% in July

This is despite the fact that the production in eight core sector industries grew at a three-month low of 1.1% in July

Moody’s Analytics, a research wing of the Moody’s group, on Friday pegged India’s industrial growth at four per cent in July, marginally up from 3.8 per cent in June.

This is despite the fact that the production in eight core sector industries, which has a weight of 38 per cent in the index of industrial production (IIP), grew a three-month low of 1.1 per cent in July.

The eight core sectors are coal, crude oil, natural gas, refinery products, fertilisers, steel, cement, and electricity.

According to Moody’s Analytics, it is the low base effect that is likely to push up IIP and not any revival in industries. “Growth likely rose in year-on-year terms in July if only because of a low comparison a year earlier,” it said in a note.

IIP data will be out next Friday. IIP had grown at 0.9 per cent in July 2014. In June last year, the growth was 4.3 per cent.

Moody's Analytics said, “India's industrial output growth has been on a relatively flat trend for most of 2015. Low commodity prices are curtailing mining output, while manufacturing remains hamstrung by a lack of investment and slowing global growth.”

India’s industrial growth slowed down to 3.2 per cent in the first quarter of the current financial year from 4.5 per cent a year ago.

There was a slowdown in all the broad segments — growth in manufacturing was down by 3.6 per cent against 3.9 per cent, mining by 0.7 per cent against 2.9 per cent and electricity by 2.3 per cent against 11.3 per cent.

IIP represents growth in volume terms. In value terms, industrial growth again slowed down to 6.5 per cent in the first quarter of 2015-16 against 7.7 per cent in the corresponding period of the previous year.

Again, there is a slowdown in most components - manufacturing growth declined to 7.2 per cent from 8.4 per cent; mining and related sectors to four per cent from 4.3 per cent; and electricity and related sectors to 3.2 per cent from 10.1 per cent. Only construction rose higher by 6.9 per cent against 6.5 per cent.