)
A new indicator to gauge the Index of Industrial Production (IIP) grew at a moderate pace in September, signalling a slight uptick in industrial production in October, according to propounder of the new concept, ZyFin Research.
The Business Cycle Indicator (BCI), lead indicator to IIP, grew 4.5 per cent in September (year-on-year) compared to 4.3 per cent in August this year. “This points to a likely expansion in October IIP,” said the monthly report by ZyFin, a financial information and content company.
According to the firm, this is the first uptick since June this year. But the question arises, if BCI in September is reflecting a moderate expansion, how would it affect the IIP in October? Clarified Debopam Chaudhari, vice-president-research of ZyFin, “Our (estimation) is composite of 40 indicators released by various government sources and forecasts trend in the IIP.” Citing examples, he said there are certain elements like cargo movement in ports, peak iron production, etc which gets reflected in the IIP data after 3-4 months. Hence, BCI is more comprehensive data which captures all such indicators.
The expansion was on the account of a rise in pig iron production, agricultural exports, organic chemical imports, container cargos being handled by major ports, revenue earnings from tourists and continued decline in global gold prices over the last few months, the firm said.
However, subdued growth in revenues earned from railway freight carriages and weak currency coupled with contraction in electricity production led to a slight arrest in the major rise in BCI.
Surjit Bhalla, senior advisor, at Zyfin said, “It still seems like a tepid recovery and there is little to change the view that the Indian economy, while better, is still weak.”
Official IIP numbers would be released on Friday, but that would be for August, as the data is released with a time lag of two months. The eight infrastructure industries, which contribute roughly 38 per cent to the IIP, grew 3.7 per cent in August, signalling a slight improvement in August IIP.
