Industrial growth falls to single digit figure in June

Now, industrial growth figures at 7.1 percent

PTI | August 12, 2010



Industrial growth slipped to a 13-month low of 7.1 per cent in June as manufacturing output dropped, but economists did not see this turning into a trend.

Also, this is for the first time in nine months that industrial expansion, as measured by the Index of Industrial Production (IIP), was in single digit, as two other segments -- mining and electricity generation -- too posted lower numbers than a year ago.

Experts opined that RBI will not relax its hawkish monetary stance, simply because industrial numbers are bad for a month. Also, food inflation again rose to double digits -- 11.4 per cent during the week ended July 31 -- which may not allow RBI to take a pause from hiking key policy rates in its monetary review next month.

The Reserve Bank has raised key rates thrice this year to put the lid on inflation. Wholesale prices based inflation was 10.55 per cent in June and the government expects this to drop to 5-6 per cent by December helped by good rains that would boost food production.

In fact, the plan panel hoped that the June figures for industrial growth will not be a trend for remaining months of this fiscal.

"I will not conclude from the June figure that this is going to be trend for rest of the year. A lot of individual components seems to be showing reasonably good growth," Planning Commission Deputy Chairman Montek Singh Ahluwalia told reporters here.

Experts attributed the sluggish pace of growth to high base effect. The expansion in factory output was quite high at 8.3 per cent a year ago and it makes even a large hike now seem modest.

"One has to take into account that the base effect of low growth in industrial production last year is now dying out and so we will see a relatively subdued IIP figure for two-three months. Maybe, from October-November, the figures will again pick up," Axis Bank Chief Economist Saugata Bhattacharya said.

Crisil chief economist D K Joshi also said industrial growth will pick up in July.

"We believe that the economy will clock an industrial growth of 9 per cent for the year. The June figures are down but we believe for July it will go up. However, volatility will remain and we will continue to see this kind of ups and downs," he said.

Economists are, however, divided whether the economy will register 8.5 per cent growth for this fiscal, as expected by the government.

Joshi said, "As for GDP growth, our forecast is that it will be 8 per cent this fiscal."

However, Ahluwalia said industrial growth need not be in double digits for the whole year for the economy to grow by 8.5 per cent, even though he said he would like industrial expansion to be at least 10 per cent.

Comments

 

Other News

Cabinet approves Dearness Allowance, Dearness Relief

The union cabinet chaired by prime minister Narendra Modi on Wednesday approved the release of an additional instalment of Dearness Allowance (DA) to central government employees and Dearness Relief (DR) to pensioners with effect from 01.07.2026 representing an increase of 3% over the existing rates of 6

Cyclone Arnab strikes Andhra as warming oceans amplify storm risks

Cyclone Arnab made landfall along the Andhra Pradesh and Yanam coasts in the early hours of Wednesday as a very severe cyclonic storm, with maximum sustained wind speeds of 125–135 kmph and gusts reaching 150 kmph. Its rapid intensification has raised concerns about how warmer oceans, global warmin

Counting matters but which ones?

The first instinct of public policy is to count. Its harder task is to count what counts. We have become remarkably good at measuring the reach of the welfare state vis-à-vis beneficiaries covered, rupees transferred, houses built, connections installed and services delivered. But some of the most

Inching closer to a trade deal with America

The cooperation between India and the United States goes back quite a time. We need to relegate that era to the backburner when Pandit Jawaharlal Nehru visited US in the times of president Dwight Eisenhower and called the American let-off of 10 million dollars in defence aid to Pakistan as a “gun w

Manch vs Musk: Forty people and a foreign billionaire

About forty people walked the roundabout on Teen Murti Marg to the gate of Chanakyapuri police station, a distance you could cover in under a minute, on Friday to protest against Elon Musk’s Starlink. The walk was called by the Swadeshi Jagaran Manch. Nobody joined them on the way, and nobody seeme

Master sculptor recalls the making of the Shankaracharya statue

The Golden Chisel: The Story Behind the Making of Ram Lalla  By Seethalakshmi S. and Rahul Nandan Rupa Publications, 168 pages, Rs 395  

Upcoming Conferences



-->

Archives

Current Issue

Opinion

Facebook Twitter Google Plus Linkedin Subscribe Newsletter

Twitter