Rise in non-oil, non-gold imports might not mean industrial demand revival

Experts and economists have said that industrial production numbers do not reflect any demand

Non-oil, non-gold imports have continued to post growth in January but it may not be a sign of revival in industrial production, economists warn.

On Wednesday, figures from the Commerce and Industry Ministry revealed that India’s merchandise exports went up for the fifth consecutive month in January. This was accompanied by a substantial rise in imports as well, which grew by 10.70 per cent in January to $31.95 billion, the highest pace seen in more than two years.

Among these imports, the non-oil, non-gold component — generally taken as a measure of industrial demand in the country — rose by 4.16 per cent in January for the fourth consecutive month. It had risen by 4.4 per cent rise in December following a large jump in November when a 9.64 per cent rise was registered.

“While the signs are encouraging, it is too early to signal a steady pick-up in industrial demand,” said Devendra Pant, chief economist at India Ratings and Research.

The latest figures available show industrial production had lapsed back into negative territory in December. The Index of Industrial Production (IIP) had contracted 0.4 per cent in December.

In November, industrial production had belied all expectations of an adverse impact of demonetisation with the index rising to a 13-month high of 5.7 per cent. It had contracted by 1.8 per cent in the month before. The sharp rise was due to low industrial numbers in November 2015 and a sharp reversal of a 12-month declining trend in capital goods. An increase in commodity prices among other reasons have been blamed for the regular rise in non-oil, non-gold imports while belying hopes for a return to steady industrial demand.